BHP mine investment may restore trust
The Australian reported that BHP’s looming USD 3.2 billion (AUD 4.2 billion) investment in the new South Flank iron ore mine will not only maintain the mining giant’s Pilbara output but could strengthen community trust that has come under strain in recent years, according to Mike Henry, BHP’s president of Australian operations.
BHP announced it had committed USD 184 million to early construction works at South Flank deposit, which is expected to replace the 80 million tonne a year Yandi mine when it runs out of ore next decade.
The mining giant also revealed that the South Flank project was expected to cost between USD 30 and USD 40 a tonne of annual production capacity, which would make it the single biggest new mining project in Australia since the construction of Gina Rinehart’s Roy Hill mine.
In Perth, Mr Henry said the project would create several thousand jobs during construction as well as “many hundreds” of longer-term operational jobs. He said the project would help repair the “social contract” that had started to fray in recent years as investment from the resources sector slowed and job cuts across the industry accelerated, amid a broader “erosion of trust” in big business in Australia, in line with the broader trend of rising populism and nationalism around the world.
Mr Henry said that “The reality is society quite justifiably expects companies like mine to not only operate within the law, but to ensure a sustainable quid pro quo in terms of ongoing investment, job creation, upskilling, support to ensure sustainable communities, and of course ongoing opportunities for local businesses to share in the wealth pie.”
BHP and fellow mining giant Rio Tinto were the target of a proposed USD 5 a tonne iron ore levy put forward by the Nationals Party in WA ahead of the last election, a potential USD 3 billion a year impost for the duo. But the resounding win by the Mark McGowan-led Labor Party has killed off the prospects for such a charge, and Mr Henry said the trust between the miner and the state had been reaffirmed by the stable policy of the new government.
The Nationals’ additional iron ore tax plan, which remains a key plank of the party’s policy platform in WA, is one of several notable new policies targeting big business in Australia in recent months, such as the bank levies proposed by both the federal and South Australian governments, the review of the petroleum resource rent tax and the new liquefied natural gas export restrictions floated by the Turnbull government.
But Mr Henry, who will ultimately be responsible for convincing the BHP board to sign off on the South Flank investments, said there had been other encouraging policy decisions in Australia that would help the nation’s prospects for attracting more investment.
Source : The Australian