Interesting messages coming from BHP in the last couple of days....

[pintpot]

http://www.smh.com.au/business/singing-from-same-song-book-20120516-1yrd3.html

 

Not a lot of room for complacency in there - but I'd like to see how this colours announcements from other miners over the nest few months; and government response

 

Look away now if you have no interest in economics

:wink:

[Guest Guest69235]

The case of big miners makes the whole 'Made in Australia' and 'Australian made, Australian owned' movement to be such a hypocritic contradiction. On the one hand, where it pertains to retail, people will nonchalantly fire-off a 'oh we pay for our lifestyle' response, but on the other hand there is no concern how multi-national business interests are exploiting Australia's natural resources and earning a pretty penny. The best use of Australia's natural resources is that they should be mined by Australian owned business and the raw materials should be converted into finished products that can be sold at a premium at home and abroad. The resulting ecosystem should generate taxes that go into both public works and further research and development that creates new technologies that keep Australia at the bleeding edge of global competition. This obviously requires vision which any of the politicians are yet to show...

[VERYSTORMY]

What do you mean by Australia owned? That the company should have no forign shareholders? How would that work? Do you have any concept of how much money it takes to develop a mine? Do you know what BHP stands for? Broken Hill Proprierty company. It is HQ is Melbourne.

 

Do you understand the economics of mining and the cyclic nature of resources? You do of course know that miners pay more tax than any other industry? And of course you realize that without mining Oz would have been massively hit by the GFC?

[Guest Guest69235]

What do you mean by Australia owned? That the company should have no forign shareholders? How would that work? Do you have any concept of how much money it takes to develop a mine? Do you know what BHP stands for? Broken Hill Proprierty company. It is HQ is Melbourne.

 

Do you understand the economics of mining and the cyclic nature of resources? You do of course know that miners pay more tax than any other industry? And of course you realize that without mining Oz would have been massively hit by the GFC?

 

From here: http://en.wikipedia.org/wiki/Mining_in_Australia

 

A number of large multinational mining companies including BHP Billiton, Newcrest, Rio Tinto, Alcoa, Chalco, Shenhua (a Chinese mining company), Alcan and Xstrata operate in Australia.

 

 

So BHP Billiton is only one company amongst many. The same page has this:

 

Mining contributes about 5.6% of Australia's Gross Domestic Product. This is up from only 2.6% in 1950, but down from over 10% at the time of federation in 1900.^[19] In contrast, mineral exports contribute around 35% of Australia's exports. Australia is the world's largest exporter of coal (35% of international trade), iron ore, lead, diamonds, rutile, zinc and zirconium, second largest of gold and uranium, and third largest of aluminium.

 

Pity that the world's largest exporter of so many minerals gets only a 5.6% contribution in its economy from a sector that contributes to 35% of exports. I don't know about others, but I am seeing dollars flying out of Australia untaxed. And its contribution to jobs:

 

Despite its export importance, the mining sector employs only a small proportion of the workforce – roughly 129,000 Australians, representing only about 1.3% of the total labour force.^[

 

 

The good thing about this particular Wikipedia article is that it provides citations. You can go look those up and if you do a bit of snooping around you might even get the latest numbers, but the picture won't be much different I think.

[VERYSTORMY]

Yes. There is a large number of non Australian companies working in Australia. That means they are investing money from outside of Australia.

 

I don't see how having a total Australian mining sector would improve the figure of 5.6%. In fact compared to most ore sectors that is very high.

 

Your article is also only based on direct contribution. Indirect is between 2-3 times.

 

Not sure of the point of how many staff it employs

 

The fact is that at the moment WA is effectively supporting the rest of Australia and the only reason it can is because of mining.

 

You still haven't answered the question of how mulit billion dollar mines would be funded purely from within Australia or how, its industrial sector, which is operating in the Asia region could hope to utilize the materials at a competitive level.

 

If you really want to understand mining, work in it

[Guest Guest69235]

Yes. There is a large number of non Australian companies working in Australia. That means they are investing money from outside of Australia.

 

I don't see how having a total Australian mining sector would improve the figure of 5.6%. In fact compared to most ore sectors that is very high.

 

Your article is also only based on direct contribution. Indirect is between 2-3 times.

 

Not sure of the point of how many staff it employs

 

The fact is that at the moment WA is effectively supporting the rest of Australia and the only reason it can is because of mining.

 

You still haven't answered the question of how mulit billion dollar mines would be funded purely from within Australia or how, its industrial sector, which is operating in the Asia region could hope to utilize the materials at a competitive level.

 

If you really want to understand mining, work in it

 

Let me crunch some numbers for you.

 

Australia's total mineral exports in 2009-10: $138 billion

(Source: http://www.mineralscouncil.com.au/file_upload/files/submissions/MCA_Pre Budget_FINAL.pdf)

 

Total contribution of mining in Australia's GDP for 2009-10: Approx. 9%

(Source: http://www.rba.gov.au/chart-pack/regions-industry.html)

 

Australia's GDP for 2009-10: Aprox. 920 billion dollars

(Source: http://www.tradingeconomics.com/australia/gdp)

 

Total contribution of mining in Australia's GDP for 2009-10 in dollar terms: Approx 82.8 billion dollars

 

That means that exports of minerals are approx. 66.66% more in dollar terms than mining's contribution to Australia's GDP. And it is not very hard to understand either. Big multi-national consortium are profit making enterprises. Australia's best interests are NOT at the forefront of their thoughts. What I see in these numbers is that there is a net flight of capital out of Australia which is exactly what Foreign Direct Investment is all about. I don't need to be in mining to understand when I am being fleeced.

 

How to fund multi-billion dollar mines? I am sure the government would find ways, once self-centered pollies can rise above their petty squabbles and think big and long term.

[VERYSTORMY]

I am sorry, but your argument is hilarious. Most countries are desperate to have an industry that is a major exporter. Yes, some of the money is going to be leaving Oz. But you offer no alternative other than some vague notion that the government can fund mines. Mining is a highly cyclic industry. Most mines spend part of their life on care and maintenance when commodity prices are low. Would the government really want to fund, what is, a very risky business?

 

How would it fund it? The investment into Oz by miners at the moment is around $28 billion. And likely to increase if some of the major iron ore projects go ahead. That doesn't include exploration. Which is almost the same again. For example Anglogoldashanti will be spending a total of $800 mill in the next couple of years. $250mill on building a new mine. The remainder on exploration.

 

Is the government also going to fund exploration? It is a high risk business with less than 1% of projects going to pre feasibility. Then less than 10% of them making it into a mine. The time frame for a half decent size deposit is around 7 years from a geo saying this looks like an interesting area, to commissioning of the mill. A lot more for large blind deposits and these are becoming the norm.

[Guest Guest69235]

An industry that exports the goods and siphons away the money is no good at all. Agreed it might be very problematic for the government to fund mines. But the next best thing is to increase taxes on the miners to ensure an equitable distribution of resources. In principle, I am against the following:

 

1. Miners making obscene profits.

2. Miners having so much power, they literally dictate Australia's exchange rate, and in turn the fate of the economy.

3. Miners being power brokers in country politics. What about power to the people???

4. Australia becoming like the gulf oil sheikhs who are held prisoner by foreign governments and Big Oil and are squandering their oil money in opulence with no investment in nurturing more sustainable economic sectors and innovation. For example, when the credit crunch came along, it became very apparent that Dubai and the U.A.E in general are very highly leveraged and thus their fate lies very much in the hands of the creditors.

[Guest Mattt]

For example, when the credit crunch came along, it became very apparent that Dubai and the U.A.E in general are very highly leveraged and thus their fate lies very much in the hands of the creditors.

 

Er, that's because Dubai has no oil.

 

Abu Dhabi has tonnes of the stuff, and ended up bailing Dubai out.

[VERYSTORMY]

I am not going to comment on the iron ore guys, as I barely regard it as mining. It is really part quarrying of industrial minerals. Though, I will say this. Australia does need to be very careful of chasing away the golden goose. I am already seeing some downturn in exploration. Deposits which have already had a lot of work done on them, particularly those that have gone through feasibility will come on stream. But the longer term is now looking much more uncertain. The big boys are now increasingly looking at Africa and Asia for where they will concentrate. Mongolia is starting boom and has the advantage of more / bigger deposits and a train ride to China.

 

However, for the metals mining I think the government is stupid to an incredible degree and is showing very little idea of the way the industry works. It is a very cyclic industry with boom times and bad times. Companies have to cash in as much as possible during high metal prices in order to stay healthy during the periods when metal prices are low. They don't seem to realize that the average new mine with a 10 year mine life won't, even with good metal prices, make a profit till at least year 4 or 5.

 

As for the industry influence on politics, that really is for us, as the electorate to manage by voting out those that we feel are pandering to a particular group too much. Personally, I am much more concerned that way about banks. They behave in ways that can have total control of the economy but do not act for the benefit of society but rather their own profits. In my opinion the government should have a nationalized bank that can offer all of the services of a commercial bank, but which behaves in the national interest.

[Guest Guest69235]

The problem is not just their political clout but also their economic muscle. I am not saying it should be whittled down but rather the other sectors of the economy should be pumped up so they are in a good proportion. And the way I see it happening is to tax mining and spend the proceeds on research, development, and innovation so that other sectors in the economy like manufacturing start to grow as well and the dependence of the AUD on mining is minimized.

 

The problem with mining playing such a key role in the value of the AUD is that it gives the miners a proxy political power. Threaten the AUD and the politicians come crumbling to their knees... there isn't much that the people can do about it through voting.

[jonmitch]

Of course lets not forget the real cost of mining

 

http://www.greenpeace.org/australia/en/

[VERYSTORMY]

I agree that other sectors need help from the government and areas such as R&D are vital. Though you would be surprised at how much mining companies give to bodies such as CSRO.

 

To be honest, generally, I and I think most people in the industry, consider the current government as being pretty hostile to mining. I put it down to a east / west divide where states such as NSW consider mining a bad dirty business but are happy to take it's cash while states such as WA want to support it as a foundation of their economy.

 

What the answer should be with regard to which industries should be promoted more is a difficult one. At the moment, Australia is going down the path of the UK with regards higher education with a lot of students doing soft choices. I would like to see much more encouragement of students tondo hard science. That, is where in the future Oz can compete on the world stage. It is hard now to compete in other areas such as manufacturing because you are up against places like china that can undercut. IT the same with India. But a lot of the hard science areas such as bio medical, physics, new tech materials and things it could lead the way.

 

The miners do have some political power, though any industry that is generating a lot of revenue is going to.

 

Oh, and as for green peace. I agree with some of what they say about protecting the great barrier reef and things. But at the same time, they gave the impression of being generally anti mining. Funny, as the computer that hosts their web site would have been made from minerals coming from about 100 mines. A lot of people don't appreciate how much we as a modern society are dependent on mining. But pretty much everything we have, touch, use is there as a result of mining. Right down to the food we eat which is dependent on phosphate to grow it