High costs hurting mine investment, says Gina Rinehart – by Clive Mathieson (The Australian – July 29, 2014)

http://www.theaustralian.com.au/

MINING magnate Gina Rinehart says the high cost of doing business in Australia is driving some multinational companies to pursue overseas projects that have the potential to further damage the country’s export revenue.

Mrs Rinehart, the chairwoman of ­the privately owned Hancock Prospecting and the nation’s richest person, lamented the decision by some companies to invest in lower-cost offshore projects that could drive down commodity ­prices and undercut Australian projects. “Sadly, too many multinational companies, even Australian companies, are focusing and preferring to invest in overseas countries with lower costs,” she told The Australian.

“For instance, Rio Tinto, which has been in Australia for decades, and made most of its revenue from Australia, is now arranging multi-billions of dollars of investment for a major resource project with substantial infrastructure in ­Guinea in Africa.

“When that’s operating, it will bring billions of tonnes of ore on to the market to compete against Australia, and push down commodity prices. Too few seem to recognise the impact this will have when we are competing with lower-cost countries and how it will hurt Australia for decades.”

Mrs Rinehart said Rio Tinto, Hancock’s partner in the giant Hope Downs iron ore project in Western Australia, should not be singled out, saying the nation must do more “to lower its costs and compete for investment”.

McKinsey & Co analysis released yesterday by the Business Council Australia ranked mining and energy as one of only three sectors of the economy where Australia enjoys an international competitive advantage.

However, the BCA warned the competitiveness of the nation’s resources sector had “declined over the last decade … soaring costs of inputs, relatively low labour productivity and regulatory delays have caused capital costs to blow out and projects to be delayed,” the council says in a landmark ­report, Building Australia’s comparative advantages, released ­yesterday.

Mrs Rinehart welcomed moves by the Abbott government to reduce “some costs and investment deterrents by eliminating the carbon tax and endeavouring to eliminate” the mineral resources rent tax. “These actions are so important and should be supported. Regrettably the critics are at it again, without any regard to the realities Australia faces, and the needs to ensure sustainable jobs and revenue in the future.”

Mrs Rinehart was talking as Hancock marked the halfway mark of the construction phase of its $10 billion Roy Hill iron ore project in the Pilbara region of Western Australia. Roy Hill, about 270km south of Port Hedland, is currently the biggest construction project on mainland Australia, employing about 3800 people. When fully operational, it will employ 2000 and ship 55 million tonnes of ore a year, making it one of the biggest single iron ore mines in the country.

For the rest of this article, click here: http://www.theaustralian.com.au/business/mining-energy/high-costs-hurting-mine-investment-says-gina-rinehart/story-e6frg9df-1227005014278