Hogsback on the migration of mining

BIRDS migrate, and so does mining, a concept which Hogsback once found ridiculous until he studied the history of mining with lessons learned many years ago flooding back this week thanks to the latest political attacks on Australia’s coal industry.

Staff Reporter

But, before going any further with current events, it is important to explain what is meant by the migration of mining – for the obvious reason that you can’t shift a hole in the ground.

Mining migration is all about the relocation of an entire industry, something which happens more often than most people realise, and for a variety of reasons.

The most obvious is that ore in one deposit runs out so the miners move to the next deposit, but there are other reasons for mining migrating, such as whether a host country withdraws the welcome mat.

In Australia today there are signs that the welcome mat is being removed in much the same way it was removed in some European countries a century ago with economic and demographic changes prompting mining to move to other countries with higher quality orebodies and governments which saw mining as a way of boosting economic development – such as Australia last century.

The Shenhua Watermark case is the hot topic today in Australian coal mining, along with a fascinating plan by the opposition Labor Party to achieve a 50% renewable energy target for the nation by 2030, with the Green Party urging a 90% target.

More later on those plans but while the debate over Australian energy targets was heating up another development was unfolding in Indonesia where BHP Billiton is planning the development of a new coal mine.

At first glance, reports that a big Australian-based mining company is planning to open a new coal mine could be seen as a misprint. Surely the story should be about closing a coal mine, not opening one.

Significantly the new mine does appear to be heading for development with BHP Billiton unveiling plans to open the Haju mine on the Indonesia island of Borneo sometime this financial year.

Haju will not be a big mine in its early days, starting at one million tonnes a year – but that’s not the point.

The point is that it is a new coal mine and it is being developed by an Australian company in a foreign country.

Under normal circumstances there is absolutely nothing unusual about Haju, or BHP Billiton’s mine development plan.

What makes it unusual is that it is occurring as debate flares in Australia about the future of local coal mining and whether there is sufficient political support for the industry to continue, let alone grow in the way other countries welcome coal mining as a way of creating jobs and wealth.

Much of this issue has been debated before, especially around the question of mining plans for Queensland’s Galilee Basin and, more recently, the Shenhua Watermark development near Gunnedah in NSW.

What puts the issue back on the front page is the combination of BHP Billiton quietly announcing its new mine in Indonesia while other people in Australia talk about a 50% or a 90% renewable energy target.

Perhaps it’s only The Hog who sees the connection between the two events and the way in which they link back to historic shifts in mining from one country to another, and for the way grand political visions can overcome economic reality.

The coal mine events are simply a case of one country saying mining is welcome (Indonesia) and another making it feel unwelcome thanks to the erection of legal barriers and constant changing of the rules (Australia).

The energy target event is part of the process designed to make coal producers believe they have a limited future in Australia with migration to another country representing an attractive alternative to pushing political obstacles uphill for another 10 or 20 years.

In theory there is nothing wrong with a political target of 50% or 90% renewable energy but if those targets come with enforceable measures such as high taxes or rival sources of energy, or heavy subsidies for renewables then it’s a different matter.

What worries The Hog is that no one proposing a political target for renewable energy has said how it is going to be achieved without tax penalties on existing energy sources, such as coal, and subsidies for renewables.

Mining companies with a nose for something rotten can smell what’s coming and while BHP Billiton’s quiet decision to invest in a new coal mine in Indonesia might be disconnected to recent events in Australia there could soon be cases of coal miners making a shift to countries where they’re more welcome.

In other words, the early signs are appearing in Australia of mining’s next great migration.