MCA warns industry not to become complacent

THE current strength of the Australian minerals sector should be used to address capacity constraints and promote wealth generation rather than be squandered on short-term consumption, Minerals Council of Australia senior vice-chairman Charlie Lenegan said today.

Angie Tomlinson

According to the MCA’s 2005 Minerals Industry Survey launched today, profit levels in the minerals industry are at their highest levels since the 1980s, growing by 14% compared with the 10 year average of 7.8%.


Investment had also expanded strongly, nearly doubling to reach $A10.1 billion in 2004-05.


"The strength and length of the current expansion will be limited however, if we fail to address continuing and emerging capacity constraints,” Lenegan said.


“That means replenishing our national mineral inventory, removing bottlenecks in export corridors, building the pool of professional and trade skills, tackling the problems posed by shortages in production inputs, and improving our relationship with the communities in which we operate.


“With mineral sector contributions to the national tax take up by 60 per cent, the revenues flowing into government coffers provide a rare opportunity for fundamental, structural business tax reform.”


The annual Minerals Industry Survey provides data on key industry indicators as well as on the safety and health performance of the sector, environmental rehabilitation, native title and indigenous development, and overseas exploration expenditure.


Lenegan said survey results showed competition for scarce skills was forcing up costs, a trend which will be even more starkly evident in next year’s survey.


“These skills shortages, combined with the shortages of production inputs like plant and machinery, are putting projects at risk of being delayed or mothballed,” he said.


Lenegan said another area of concern was the faltering effort to replenish the national minerals inventory. Australia’s share of global exploration spending was just 12.6% in 2005, substantially lower than the 17.6% recorded in 2002.


“The industry urges the Federal Government to commit to measures to address the structural impediments to mineral exploration expenditure in Australia, including a flow-through shares scheme.”