Policy makers need to act now if Australia’s mining industry is to remain competitive compared to emerging resource nations, an industry chief says.
The comments by Minerals Council of Australia chief executive Mitchell Hooke come as a new report shows the domestic mining sector is losing its competitive edge due to high costs and increased sovereign risk.
“Other developing countries are pushing us out of markets we thought we were dominant in,” Mr Hooke told Sky Business on Monday.
“Policy reforms are needed to help companies do the heavy lifting.”
In a separate statement on the council’s website, Mr Hooke said rising costs of labour and fuel were putting companies under pressure.
Governments could help tackle this with reforms to project reviews, education, labour force and technology.
“With commodity prices having fallen from peak levels, complacency and backsliding on economic reform pose a real threat to the minerals sector and to the wider economy,” he said.
Competitiveness was a particular challenge for coal and base metal producers, Mr Hooke said, with more than half of Australia’s mines coping with costs above the global average.
Outside the margins of major Pilbara production, iron ore was also less competitive, he added.
The report, by Port Jackson Partners on behalf of the Minerals Council, suggested two scenarios for Australian mining in the future.
One was focused on structural reform, and the other without, suggesting that wider economic growth could suffer in the latter case.
“The opportunity lost under the headwinds scenario is very large,” the report said.
“Policy decisions made now can create or destroy an economic opportunity equal to more than five per cent of the Australian economy in 30 years, with lower minerals industry growth quickly translating into poorer economic performance.”
The report recommended a change in the national dialogue, with less of a focus on how mining wealth should be shared, and instead looking at how the industry could become more competitive.
“Other established minerals producers have acknowledged the importance of minerals sector competitiveness and are taking the need for long-term reform seriously,” the report said.
“Canada has announced plans for a one project, one review approvals process, Chile is driving innovation in state-of-the-art mining techniques, and Brazil has announced plans to modernise its regulatory framework to encourage investment.”
Steps needed to be taken to prevent wage cost super-inflation, and to attract skilled workers to the sector, the report said.
It also recommended a reworking of the Fair Work Act, to encourage a collaborative interaction between employers and employees.
