We have a chat with newly appointed Minister for Resources, Energy and Northern Australia the Hon Josh Frydenberg about what he has been up to in his first six months on the job and what the future of mining and resources in Australia holds.
Firstly, you seem to have settled quite well into your new role. Do you have any grand plans or exciting projects in the books?
The first six months in my portfolio have been busy and fulfilling. I have taken the opportunity to inspect some of the largest resources projects in our country, including Australia Pacific LNG’s facilities on Curtis Island, the Gorgon LNG facility on Barrow Island in Western Australia, Olympic Dam in South Australia, Rio Tinto’s Port Dampier operations in the Pilbara, Woodside Energy’s Pluto LNG site, the Kalgoorlie gold super pit and the Ichthys LNG site in Darwin. I have also made a number of trips to northern Australia, including to Mackay, Townsville, Cairns, Rockhampton, Gladstone and Karratha to name just a few, where I have witnessed the real entrepreneurial spirit of northern Australians. I look forward to continuing to be an advocate for the strength and resilience of Australia’s resources and energy sectors.
You have recently attended many key ministerial meetings overseas. What is Australia’s status in the global energy and resources game?
A key focus for the year ahead will be continuing to build on Australia’s bilateral relationships with our international partners in the resources and energy sectors. Australia is the world’s largest exporter of coal, the largest exporter of iron ore, has the largest uranium reserves and is forecast to become the largest exporter of LNG by 2020, making us a key player in these sectors. Over the last few months I have participated in a number of international ministerial meetings, including the APEC Energy Ministerial Meeting in the Philippines and the G20 Energy Ministers Meeting in Turkey. I have also recently hosted the Executive Director of the International Energy Agency, Dr Fatih Birol, the Indonesian Minister for Energy and Mineral Resources, His Excellency Sudirman Said, the Indian Minister for Power, Coal and New and Renewable Energy, Piyush Goyal, and have participated in discussions with key industry leaders in the United States, China and South Korea.
Each of these meetings has emphasised the leading role that Australia plays in the resources and energy sectors and I am confident we have a strong reputation as a stable and reliable destination for foreign investment in these sectors.
Is there any positivity in the industry at the moment, in regards to new projects and support for the industry during this post-boom period?
To paraphrase Mark Twain, the rumours of the death of Australia’s resources sector are greatly exaggerated. Peaks and troughs are part of a cycle representing complex supply and demand dynamics. But despite recent headwinds, we have a good story to tell. Resources and energy represents 10 per cent of our GDP and employs around 300,000 people, and I remain upbeat about the future of these sectors.
International demand for Australian resources remains strong, particularly with growing energy demand from our regional neighbours, and our companies remain resilient. I have been pleased to welcome a number of major project milestones already, including the first shipment of LNG from the Gorgon project and from the Australia Pacific LNG project, Rio Tinto’s $2.6 billion investment in the Amrun bauxite project in north Queensland, the $11 billion Roy Hill Project’s first shipment of iron ore, an estimated US$2 billion further investment in the North West Shelf Project’s Greater Western Flank Phase 2 project. This sector will be important to our economy for many years to come.
Adani’s Carmichael Coal mine has had mining leases approved by the State Government – what does this mean for not only Queensland, but the country as a whole?
The Adani Carmichael project will create Australia’s largest thermal coal mine, boosting the Queensland economy by providing thousands of new jobs. Once it is operational, the Carmichael mine will produce more than 40 million tonnes of thermal coal per annum, which will be exported to Asian markets, including India. This is enough coal to provide power to 100 million people in India each year and will provide significant investment income for Australia, solidifying our position as a key global energy leader.
The $16.5b project has faced some hurdles in the lead up to approval, with environmental groups bringing the case to courts constantly. Do you think it is too easy for environmentalist vigilantes to fight projects, such as the Carmichael project, in court, in court, to delay the approval process?
It is concerning that groups ideologically opposed to these types of projects are launching protracted challenges to cause delays even though such projects are subject to evidence-based environmental approvals and regulation. While it is vital that necessary measures are taken to ensure the environment is protected through stringent environmental assessments, the Government is also focused on driving down the cost of doing business in Australia and continuing to promote the country as an attractive destination for investment.
The Government is committed to cutting red tape and streamlining environmental approvals, while also ensuring that major projects that will contribute to economic growth are supported. A principal measure to support this is the proposed One-Stop-Shop environmental approvals process to remove duplication between the Commonwealth and the States.
Your role has seen some special attention paid to Northern Australia. How will the Northern Australia Infrastructure Facility (NAIF) benefit or support the mining and energy sectors?
The Northern Australia Infrastructure Facility (NAIF) is the cornerstone of the Government’s White Paper on Developing Northern Australia, which was released in June last year. It will offer up to $5 billion in financing, primarily through concessional loans, to encourage and complement private sector investment in economic infrastructure that otherwise may not be built. Financing provided by the NAIF will provide a framework to ensure the economy and businesses in our north continue to prosper. This could benefit the resources and energy sectors through the development of supporting infrastructure for major projects.
Final eligibility criteria will be outlined in the Investment Mandate, which is currently being finalised. Supported projects are expected to have a predictable cash flow, long economic life, high development costs relative to the operating costs, face significant barriers to entry, and assist a range of sectors.
As you mentioned, Australia is the world’s largest iron ore exporter and the world’s largest coal exporter. What is the plan to complete the trifecta and become the largest LNG exporter by 2020?
Australia is rapidly expanding its LNG export capacity, with seven projects in operation nationwide and another three to come on line in 2017. A number of important projects have made their first shipments this year, including the Gorgon LNG project in Western Australia, which at US$54 billion is the largest ever single private-sector investment in Australia, and the Australia Pacific LNG project in Queensland.
Between now and 2020, our LNG export volumes will triple, at which time we are expected to overtake Qatar as the world’s largest exporter of LNG. By this time we are forecast to supply around 40 per cent of China and Japan’s LNG needs, and 25 per cent of Korea’s. A staggering $200 billion worth of investment in capacity building over the past decade alone has allowed Australia to leverage off its large endowment of natural resources, putting us in a prime position to capitalise on growing global demand for gas.
How do these plans to become the largest resources exporter align with the Renewable Energy Target?
Australia takes its international obligations to reduce emissions very seriously and is effectively integrating climate and energy policy. We do not see effective action on climate change as mutually exclusive to our dominant position in global energy and resources markets. The Renewable Energy Target aims to see more than 23 per cent of Australia’s electricity being derived from renewable sources by 2020.
To support this, the Australian Government and industry have co-invested in around 230 renewable energy projects in Australia worth a combined $2.7 billion. Ultimately, each country will determine their own policies to reduce emissions and develop their renewables sector to best reflect their national circumstances.
A huge issue in the mining industry has been FIFO workers and mental health. The Western Australian Government was accused of abandoning FIFO workers after only establishing half of the recommendations given in the state inquiry into mental health impacts of FIFO, and the Queensland FIFO inquiry called for an end to the anti-discrimination act allowing companies to employ workers based on where they live. Is there anything the Government, on a federal level, is considering in regards to making a change to FIFO work practises?
Fly-in fly-out (FIFO) workers play an important role in mining and resources project development across the country. It is important to ensure the system works well for the workers, the local communities and companies who are investing in projects. In short, there needs to be a balance. The Australian Government has committed to work with the States and Territories in a range of areas to support a sustainable mining industry, including the appropriate provision of local government infrastructure and services.
However, decisions on the make-up of a mine workforce are largely a commercial matter, recognising FIFO is an important source of skilled labour for a number of mining operations in remote locations.
To paraphrase Mark Twain, the rumours of the death of Australia’s resources sector are greatly exaggerated.