This speech was given at the Canada-Australia-New Zealand Business Association Luncheon, Sutton Place Hotel, Vancouver, Canada on March 3, 2011.
“Despite the global financial crisis, Western Australia has enjoyed
a decade of average annual economic growth of about 14 per cent,
which is an outstanding result by any measure.”
(Western Australia Minister Mines and
Petroleum, Norman Moore, Mar/3/2011)
Good afternoon ladies and gentlemen.
I would like to thank Nerella Campigotto, President of the Canada-Australia-New Zealand Business Association, for inviting me here today. I always enjoy the opportunity to talk about Western Australia’s resources industry.
I have been a member of the Western Australian Parliament since 1977 am currently the longest serving sitting member. I serve the state government proudly and have seen many changes to the economy over the past thirty-four years. Nonetheless, I remain focused on the future.
Both the Australian and Western Australian governments place great importance on ensuring their economies reach their full potential. Far from simply enjoying the short-term material benefits of increased employment and wealth, we aim to build a sustainable long-term industry, with all the benefits this brings.
Western Australia is blessed with geology that makes it highly prospective for most mineral commodities and we have a highly skilled exploration sector seeking to exploit that prospectivity.
In addition, there are world-class support services backing the efforts of explorers. These range from essential basic transportation to highly sophisticated laboratory, computing and consulting services.
On top of these is a pool of highly skilled and innovative geologists planning and undertaking exploration that will ensure the future of Western Australian mining.
In 2009-10 the value of Western Australian mineral and petroleum production was $71 billion Australian dollars of which mineral accounted for $52 billion. I’m sure most of you will be aware that iron ore was the major contributor with output valued at $34 billion Australian dollars.
Gold, nickel and alumina combined accounted for a further $14 billion. Western Australian accounted for 56 per cent of Australia’s total mineral and energy export revenue in 2009-10.
This remarkable result was achieved during a challenging economic period and featured record results from the iron ore and gold sectors.
Despite the global financial crisis, Western Australia has enjoyed a decade of average annual economic growth of about 14 per cent, which is an outstanding result by any measure.
The resources industry is by far the largest contributor to the Western Australian economy, representing almost 30 per cent of Gross State Product.
Underpinned by strong demand from major trading partners in Asia, mineral and petroleum exports accounted for almost 90 per cent of state merchandise revenue in 2009-10. Western Australia is in turn the driver of the Australian economy.
The state is one of the great mineral provinces of the world with an impressive 540 commercial mineral projects. These embrace 968 operating mine sites that produce more than 50 different minerals. In 2009-10, there were also 68 operating oil and gas fields.
Further upstream, Western Australia accounts for 56 per cent of all Australian mineral exploration spending and 71 per cent of all petroleum exploration spending.
State mineral exploration expenditure reached 1.24 billion dollars in 2009-10. While slightly down on the previous year, it is still the third consecutive year that the mineral exploration expenditure has surpassed the billion dollar mark.
The state boom in iron ore production has also caused a boom in iron ore exploration, with this now accounting for about 40 per cent of the total expenditure.
The strength of mineral exploration in Western Australia is in fact often understated. For example, exploration statistics from the Metals Economic Group of Halifax only take into account non-ferrous minerals.
The eastern states of Australia may be known for their coal, but Western Australia has iron ore, iron ore and more iron ore, not to mention a world-class gold, nickel and bauxite endowment. And in fact, Western Australia does have a large resource of steaming coal in the Canning Bsin in the north of the state.
These deposits are now receiving the attention of explorers and I’m hopeful a large export industry will be developed in the long term.
Recent exploration has resulted in numerous significant discoveries including the Tropicana gold deposit, the Cyclone mineral sands deposit in the Eucla Basin and the Doolgunna copper-gold deposit. This last discovery has re-focused attention on Western Australia’s copper potential.
There have of course been ongoing discoveries of iron ore deposits during this time and not only in the renowned Hamersley Basin.
The discovery of Tropicana in 2002 occurred in a hitherto unknown gold province along the southeastern margin of the Yilgarn Craton. The five million ounce and growing deposit proved that greenfields exploration can still yield world-class discoveries in Western Australia.
Success is still being made in that region, with a new discovery announced in January this year with co-funding from a government initiative. Gold exploration now accounts for up to 30 per cent of the State’s total mineral exploration expenditure.
Meanwhile, Western Australia’s mineral diversity was in evidence with the recent discovery of a new supply of rare earths. This is of course a particularly uncommon event outside China. The Mount Weld rare earth element project already has ore stockpiled and the concentration plant is largely built.
Australia continues to attract about 13 per cent of world-wide non-ferrous metal exploration, excluding uranium. This places it second after Canada on 16 per cent.
The West Australian government has worked tirelessly over the past two years to increase exploration spending and industry perceptions of investing in the state. One of the first things we did after gaining office in 2008 was to overturn a longstanding ban on uranium mining in the state. We now have a thriving uranium exploration industry with five projects at either the feasibility or government assessment stage.
Our efforts have been successful, with Western Australia lifting its proportion of national mineral exploration expenditure from 49 per cent five years ago to 57 per cent at present.
The government’s $80 million Australian dollar exploration incentive scheme, of which I’m particularly proud, is aimed at encouraging exploration activity in Greenfield and frontier areas. The Scheme has a number of components that focus on increasing the amount of geological information available for explorers.
A high profile component is the co-funded drilling program, which sees the government contribute to the cost of private sector exploration drilling. In 2010-11, the program allocated $5.3 million to 62 projects, with gold exploration featuring strongly. Drilling under this scheme is achieving a high success rate.
Exploration incentive scheme funding has also been provided for airborne magnetic and radiometric surveys of the quarter of the State that remained uncovered. Most of the new surveys are flown at 200 metre line spacing at 60 to 80 metres above the surface. Following a recent release of information from these surveys, exploration licence applications were lodged within hours!
In collaboration with other partners, the state government is also completing interconnected deep seismic traverses across major geological structures. The exploration incentive scheme is leading to new growth opportunities for the resources industry, greater innovation, increased employment levels and a more complete picture of the geology of Western Australia.
While on this topic, I must mention that all information on Western Australia geology, mineral deposits and mineral titles is available for download free of charge from the Department of Mines and Petroleum website. This includes even huge geophysical and geographic information system datasets.
A current area of discussion in Australia concerns mining taxation, which generated un-paralleled media and political scrutiny last year and was instrumental in the sudden, unexpected downfall of a Prime Minister. The Western Australian government opposes the introduction of any resources rent tax by our federal government.
We believe it will place an unfair burden on developers of resources in Western Australia and lessen the State’s attractiveness in the eyes of foreign investors. Proof of the negative impact was provided in May 2010, by Canadian Finance Minister Jim Flaherty who was reported in the Australian media as describing a prototype of the tax as “another competitive advantage for Canada.”
Similar comments were made by the Chilean mines minister and Papua New Guinean prime minister. In addition, the State government believes a federal profit tax will compromise the Western Australian community’s right to a fair return of royalties from resource development.
Small to medium-sized mining companies and their representative bodies were legitimately displeased with the lack of consultation from the federal government in formulating its proposed tax. The Western Australian government opposes any changes or amendments to the Federal Petroleum Resources Rent Tax System for similar reasons.
Our approach to all new policy and procedural arrangement is geared toward consultation with industry and stakeholders. In October 2009, we announced reforms t project approvals, including a new lead-agency framework and a suite of legislative changes. The lead-agency framework ensures that one department will either undertake all approvals required for a resource project, or coordinate them through other agencies.
These changes have been supported by improvements to online monitoring of approvals and interagency agreements and communications. The Western Australian government has shown its commitment to streamlining approval processes by designating eight million dollars in additional funding to the Department of Mines and Petroleum over the next four years.
This is being used to develop web-based systems that allow applicants to lodge their applications online and track them through necessary approvals processes. An Australian-first pilot program allowed the Department of Mines and Petroleum to notify the public of mineral title applications through its website.
This information was previously only available thorough newspaper advertisements paid for by the applicants. Another government focus is ensuring Western Australia has the infrastructure necessary to move bulk mineral and energy commodities to export ports. The state has moved more than 400 million tonnes of iron ore alone this year.
Major infrastructure projects underway include the four billion dollar Oakajee port and rail project in the mid-west region, the Bownse liquefied natural gas precinct in the West Kimberley, and the Pilbara Cities initiative. This last program aims to provide modern services in the towns of the North West region, where the bulk of Western Australia’s resources wealth is generated.
It supports programs including industry diversification, indigenous participation, cultural enhancement and infrastructure development. All of these will allow resource developers to tap into a local source of employees.
I would like to conclude by turning your attention to the vexed question of foreign investment. Foreign investment in a domestic industry always attracts comment and criticism for a multitude of reasons.
In relation to Australian minerals and energy, the major concern is usually about the loss of control over a major national asset. Australian governments of both political persuasions have recognized contentious issues such as this and have established a transparent proves by which investment proposals are considered. This is administered by the Foreign Investment Review Board.
Australia receives investment proposals from companies in a host of nations but Chinese companies have been by far the most active in recent years. It is important for you as potential investors to be aware that no proposals, including those from China, have ever been rejected.
A few have had additional conditions attached but have eventually been approved. If potential investors in Australia have any uncertainty they should not hesitate to raise their concerns with the Foreign Investment Review Board as early as possible.
Australia has a wealth of investment opportunities but there is perhaps no better place to be than Western Australia.
The high level of exploration activity and success highlights the State’s immense potential and is a very good reason why you should be involved in your own right or by joint venture with companies already active in the State.
Staff from the department of Mines and Petroleum present today can provide you with more detailed information on opportunities.
The message I want you to take form this address is that we would like you as an investor in Western Australia. We want you active in our state and we want your investment at all levels from grassroots exploration to advanced development.