Mixed response to MCA merger plan

STATE and industry representative bodies have responded ambivalently to a merger plan from the Minerals Council of Australia.

Kate Haycock

According to a news report in Fairfax media yesterday, the MCA plans to merge industry bodies, including the Australian Aluminium Council, the Australian Uranium Association and Australian Coal Association, with state and territory minerals councils.

The MCA has reportedly sent a letter to the state and commodity representative bodies with a merger proposal.

The letter – which has not been publicly released – was signed by major Australian mining companies Rio Tinto and BHP Billiton, as well as other large miners and suppliers, such as Downer EDI.

According to news reports, the signatories have said they will not continue paying fees to both state and national commodity-based bodies.

The merger proposal has been met with a mixed but generally cautious response.

In Western Australia, the Association of Mining and Exploration Companies, a group that represents small and mid-sized exploration plays in mining and oil and gas around Australia, said it would not be involved in any merger.

AMEC chief executive officer Simon Bennison said, in a letter to members, that AMEC continued to be a credible, viable and successful national representative body for the junior and mid-sized sector.

“It is not surprising that those pushing for the merger also make up the majority of the board of MCA and represent the so-called ‘big end of town’,” Bennison said.

He said organisations could find themselves being unduly influenced if they depended on survival from a few major sponsors, whereas AMEC was not in this position and would represent its members on an “equitable basis”

The Western Australian Chamber of Minerals and Energy has not dismissed the merger proposal from the MCA, but neither has it endorsed the strategy.

CME chairman Kim Horne said yesterday at its annual general meeting the approach was the most “serious” of any recent discussions about forming a national body, and a number of the CME’s key members – which presumably include companies like Rio and BHP – supported a national body with state branches.

“As important as these members are, and while I respect their views, they do not necessarily represent the views of the majority or any of our oil and gas members,” Horne said.

“Nevertheless, the concept of an aligned and cooperative national body is a good one and we will work hard to find a solution for this to exist.”

The CME will go ahead with due diligence over the proposal and then recommend an option to its members, but Horne said regardless of any decisions it would not be making any changes to the CME structure this year.

“The only options that will be recommended to the membership will be ones that maintain the strong focus on state issues and present value to the majority of the membership,” he added.

Queensland Resources Council chief executive Michael Roche said the deal had been considered by QRC in its regular board meeting on April 16 and the council had decided to “engage” with the MCA.

He said the QRC would seek “mutual benefit” from developing business plans with the MCA that strengthened national minerals industry advocacy “without in any way diluting the strong local presence and advocacy on behalf of the broader resources sector provided by the QRC”.

While several industry bodies told ILN sister publication MiningNews.net they were unable to give comment on the merger proposal, many within the industry raised concerns over the MCA’s ability to work effectively with state governments.

There are also concerns that state governments might find the proposal worrying, as it would shift the voice of local mining representation away from bodies with pre-existing relationships with both authorities and local communities, making that relationship more distant and less effective.

However, there are also questions about whether the MCA could be biting off more than it can chew in seeking to tackle the multitude of issues currently covered by local and industry-specific representative groups.

This was reinforced by WA Premier Colin Barnett yesterday, who was openly critical of the plan at the CME annual general meeting.

According to the West Australian, he said a lobby group based on the other side of the country would have little or no power to push for changes in WA.

Another critic of the MCA plan is Atlas Iron chief executive David Flanagan, who told MNn it was absolutely critical that there be independent representation of the junior and mid-sized players.

He said all industry bodies needed to think very carefully about the MCA’s proposal and what it might mean for the future of the Australian mining industry.

Flanagan said the main danger was that any national body could be beholden to its largest members, which would be extremely bad for competition in Australia.

“Anyone who is out there supporting juniors and new entrants is supporting competition,” he said.

Not everyone in the mining industry views the move so negatively, however.

One source told MNn that the plan from the MCA was a brave one and had clear benefits in terms of reducing redundancy and presenting a unified front to government.

Meanwhile, the Northern Territory Resources Council was one local body that was already in discussions with the MCA over a proposed merger before details emerged of the nationwide plan.

A spokesperson for the NTRC told MNn the group was continuing with its plans to put together a detailed proposal for a merger with the MCA, which it would take to its members for the final vote.

This would include a full due diligence over the proposed merger, but the NTRC broadly considered it to be a “good idea”, the spokesperson said.

MNn put in a call to the MCA for further comment on the proposal but had yet to receive a response at the time of publication.

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