Queensland quakes in 2013

QUEENSLAND saw doors of opportunity open and shut over the course of 2013, a year characterised in the state’s mining industry by a raft of legal reforms and company belt-tightening.
Queensland quakes in 2013 Queensland quakes in 2013 Queensland quakes in 2013 Queensland quakes in 2013 Queensland quakes in 2013

Queensland Resources Council CEO Michael Roche.

Justin Niessner

The Sunshine State’s mining sector started the year largely underwater thanks to cyclone Oswald – a production-curbing, port-hampering force majeure that blindsided the state and took weeks to overcome.

Many Queensland mining companies might be tempted to take it as a metaphor for the frustrating year that followed, when a slew of well-meaning government initiatives offered little consolation amid major market constraints.

A survey by the Queensland Resources Council in January forecast 458 job losses for the state’s resources industry over the year. And while the exact numbers aren’t in yet, it didn’t take long to reveal the QRC’s over-optimism.

In March, Xstrata Coal decided to close its Brisbane office and move corporate services to Sydney, and by June, the newly merged Glencore Xstrata giant was cutting 450 jobs at its Newlands and Oaky Creek mines.

Glencore Xstrata also closed its Collinsville mine in September, leaving 400 people out of work.

Other big cutters included Peabody Energy, which axed hundreds of contractors across the state, and Downer EDI, which cut 185 jobs from BHP Billiton Mitsubishi Alliance’s Goonyella Riverside mine in June.

By mid-year, reports were floating in that small town Queensland was feeling the effect, with weakened regional economies failing to readjust mining-inflated rents and cost of living expenses.

The cost-control efforts of Queensland miners magnified a national trend which led to the state’s exploration spending being down 31% by October to $A732 million.

Plans undertaken over the year to modernise Queensland’s mining laws by replacing five separate legislative frameworks were described by global legal firm Norton Rose Fulbright as one of the largest legislative reforms in the history of the state’s resources sector.

In February, Queensland Mines Minister Andrew Cripps repealed a number of restricted areas south of Mount Isa on encouraging government survey data, opening some 2364sq.km to mining use. This was followed by a government land-use plan in July, hailed by miners as a much-needed opportunity to co-exist with regional farmers.

In July, the government introduced measures to cut green tape after Queensland producers complained they were paying 20% more royalties than five years ago. Process streamlining during the month also led to a reform program, with Cripps specifically targeting gold juniors expected to buoy the state’s exploration scene.

This followed the introduction of a $30 million exploration support package that Cripps called the largest such investment ever made by the state government.

Queensland uranium and rare earths made a step forward in September when the government declared the state – which had long banned the mining of radioactive materials – would be uranium ready by 2014.

Big bauxite plans for the Cape York Peninsula, however, experienced a major roadblock in November when a government environmental decision fizzled a merger between Cape Alumina and Metrocoal aimed at developing the Pisolite Hills project.

In the same month, Rio Tinto made headlines with an announcement it would shut its Gove alumina refinery in the region.

Both Rio and Cape Alumina were named in April among the five shortlisted companies vying for the prized Aurukun bauxite resource on Cape York, estimated to hold 650 million tonnes.

Other milestones included the opening of Evolution Mining’s Mt Carlton operation, BHP Billiton Mitsubishi Alliance’s Daunia mine and the state’s first virtual reality mine training facility in Brisbane.

Later in the year, attempts to offset increased royalty rates resulted in tax breaks for Galilee Basin developers, a move that provoked the ire of outspoken entrepreneur Clive Palmer who said the government was ignoring his massive China First project in the region.

Palmer was unsurprisingly at the centre of much of the state’s mining news over 2013, winning an independent seat in the House of Representatives as the member for Fairfax on the Sunshine Coast.

The Palmer United Party went on to score a Queensland senate seat for former rugby star Glenn Patrick Lazarus as well as parliamentary victories in Western Australia and Tasmania.

Meanwhile, Queensland confirmed the major project status of Palmer’s China First development, planned to connect with port expansions at Abbot Point which experienced uneven progress over the year.

In March the state government suggested enforcing timely construction by companies contracted to expand Abbot Point, but by November, BHP Billiton had withdrawn as a preferred developer.

GVK Hancock and Aurizon agreed to a $6 billion joint effort to develop rail and port infrastructure in the region to service project’s including Gina Rinehart and GVK’s massive Kevin’s Corner complex.

The works helped underline a June report that confirmed coal was still king in Queensland, with the sector alone estimated to contribute $11 billion in royalties to taxpayers over the next four years.

QRC chief executive Michael Roche, however, was unimpressed with the state’s royalty situation and the seemingly directionless political disputes interpreted as the root of many of 2013’s mining industry setbacks.

“It’s becoming increasingly clear to me and my members that politicians just don’t get it,” he said in April at the Minerals Council of Australia biennial tax conference in Brisbane.

“Regardless of the election result, it’s my expectation that we will continue to see squabbling continue over entitlements to the economic rents from resource extraction.

“After more than a century of federation, we’re still to see a nationally binding agreement on preferential tax-royalty approaches to sharing arrangements.”