Queensland mining industry asks for bailout

Queensland miners' call for tax relief to save jobs is 'outrageous', say opponents

The industry already receives $3bn a year in state support, says Lock The Gate, and urges the premier to resist aid for companies that millions in the boom

the Guardian,

8 February, 2016

Queensland’s resources industry has called on the state and federal governments for help to save thousands of jobs after a study showed that a third of the state’s coalmines are running at a loss.

The report, commissioned by the Queensland Resources Council (QRC), also found that more than half of the mines producing thermal coal for power stations were losing money.

“It’s really time for government to sit down with the industry and see what we can do to hang onto the jobs we’ve got,” the chief executive of QRC, Michael Roche, told ABC radio.

Roche said governments must consider what support could be given to the industry, such as tax relief. He said conditions were some of the worst faced in decades.

But the anti-mining group Lock the Gate said it was “outrageous” for miners to claim more help from the state government, which he said already gave $3bn a year in various subsidies to the industry.

“The industry is inherently cyclical and there is no case for industry relief. The industry should have been prepared for the inevitable downturn,” said spokesman Drew Hutton.

“Mining is a long-term business and it obviously did a very poor job in managing its cashflow. The Queensland government must resist subsidising mining and rewarding them for poorly managing their businesses.”

Roche estimated that 21,000 jobs had been lost in the industry in Queensland in the past two years as demand from China has slowed and commodity prices have plunged.

“We would like government to think about what we need to do to protect the remaining 60,000 jobs in the Queensland resources sector,” Roche said.

But Lock The Gate said the industry provided less than 3% of jobs in Queensland and that rehabilitating the landscape from the impact of open-cut coal mining in particular would create far more employment than financial relief for existing operations.

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The Australia Institute produced a report in 2014 which said that over a six-year period to June 2014, state governments in Australia spent $17.6bn supporting the mineral and fossil fuel industries. Queensland received the largest share, $9.5bn. The QRC rejected the claims.

Coal mining has been hit hard by shifts in the world economy. Australian thermal coal was selling for $US140 a tonne five years ago but now fetches around $US50.

The burning of coal in China is in serious decline as its industrial expansion moderates and the government in Beijing tries to reduce fossil fuel use in order to curb air pollution. Demand from India and other developing Asian nations is expected to pick up some slack but not enough to compensate the huge fall in Chinese use.

Some operators are struggling to survive in the changing market and even the mighty BHP Billiton, the biggest mining company in the world, has been taken by surprise by the falling prices.

“These are some of the worst conditions they have faced in decades,” Roche said. “Some companies are teetering on the brink.”

He added that mining companies should not have to pay such high royalties to the government.

“There are many companies paying royalties to the government yet they are not making any profits,” Roche said. “There is a whole range of government-imposed and sanctioned costs and charges that really need to come under the microscope.”

“We’re not looking for a bail out,” he said. “We are looking for the government to recognise that one of the biggest job generators in this state, one of the biggest sources of government revenue, is under huge pressure.”

Roche said the Queensland premier, Annastacia Palaszczuk, had agreed to a meeting. “We are looking for a partnership to protect the maximum number of jobs in the resources sector,” he said.

The Australian Conservation Foundation’s chief executive Kelly O’Shanassy said: “This report, commissioned by the industry itself, shows the coal industry is finally realising the age of coal is over.

“The coal industry employs only 0.4% of the Australian workforce, but gets hundreds of millions of dollars every year in subsidies. Despite this special treatment, it appears the industry is not financially viable.”