Olive Downs and the call for clarity in Queensland mining

Andrew Tunnicliffe 2 September 2019 (Last Updated September 2nd, 2019 09:59)

With Olive Downs open-cast mine almost certain to receive final approval in the coming months, Queensland’s mining future looks secure. Andrew Tunnicliffe speak with Queensland Resource Council’s Ian Macfarlane about the importance of mining to the state and how regional and national policymakers should continue to recognise the crucial role it plays.

Olive Downs and the call for clarity in Queensland mining
Resolute Mining’s Ravenswood gold mine in Queensland. Credit: Queensland Government

In May 2019 the Government of Queensland approved Pembroke Resources’

proposed Olive Downs mine. The A$1bn open-cut metallurgical coal project is now inching towards final approval from the Federal Government, although industry experts have warned final approval isn’t yet assured, with the company yet to be granted a mining licence for the project.

Should the application be successful, the company says the mine will employ up to 1,000 permanent workers once operational, producing as much as 15 million tonnes of metallurgical coal a year. During the construction phase 500 jobs will be available, according to company representatives.

Significantly, the mine will use existing infrastructure for water, power and the transportation of its metallurgical coal, which will be exported via the Dalrymple Bay Coal Terminal near Mackay. It, like the 25 other operational mines in the region, will have a projected lifecycle of 79 years.

Speaking after the approval from the regional government, Barry Tudor, Pembroke’s chairman and chief executive, said: “There is no viable alternative to coking coal in the primary steel production process for the foreseeable future and Olive Downs will be a major supplier to the world’s leading steel producers, and as such, will be a valuable contributor to the Queensland and Australian economy for generations.”

The news was welcomed by the Queensland Resource Council (QRC), which said it was a ‘commitment of confidence’ at a time when the region’s unemployment rate was rising. QRC chief executive Ian Macfarlane says: “Olive Downs is a clear and practical example of all levels of government working together to provide big city economic opportunities in regional areas surrounding the mines. This investment from Pembroke underpins the high quality coal sourced from the Bowen Basin, which is the largest coking coal export basin in the world.”

Queensland’s economy relies on mining

Committing to no fly-in or fly-out rosters, Pembroke has said its focus would be on local employment, with the aim of attracting workers from Moranbah, Nebo and Dysart, as well as the surrounding towns of Central Queensland. This makes the project vital to the ongoing economic health of Queensland’s economy according to Macfarlane.

“Queensland’s resources sector provides one in every five dollars in the Queensland economy, sustains one in eight Queensland jobs, and supports more than 15,400 businesses and community organisations across the state, all from 0.1% of Queensland’s land mass,” he says.

Recent labour force figures reported by the Australian Bureau of Statistics support his view. They showed the sector added an extra 5,730 jobs over the last 12 months, the equivalent of one new job every 90 minutes Macfarlane says.

“Queensland’s resources sector supports more than 315,000 direct and indirect jobs. Jobs which provide education and training to advance employees into the next stage of their careers,” he adds. Coal mining provided A$19.9bn into the Queensland economy, making up 68.3% of all resources direct expenditure, according to QRC figures for 2017/18.

In an effort to continue the growth of the sector, the industry body recently announced a partnership with Greater Whitsunday Council of Mayors aimed at further boosting resource jobs. Under the Memorandum of Understanding, three mayors – from Mackay, Isaac, and Whitsundays Regional Council – will work in partnership with the sector to ensure the Mackay region receives its ‘fair share’ of economic benefits, the QRC said.

The agreement will see the sector promote sustainable development, educate local communities, support the industry’s sustainable growth through planning infrastructure and social needs, support local communities in the Greater Whitsunday region in case of disputes, and ensure the region sees royalties are reinvested.

Mining industry needs clarity

Macfarlane has been critical of taxation policy in the past, branding it a ‘threat’ to mining in and suggesting it puts the local sector at a disadvantage compared with other regional sectors across the country.

“Coal royalties in Queensland are the highest in the country and more than double the rate of New South Wales. Latest figures show the resources industry is delivering A$5.2bn to the State Budget in royalty taxes, including A$4.36bn from coal. These are record returns and they show the importance of the resources sector to the state budget. We have asked for certainty about royalty tax rates to ensure stability for long-term investments and the jobs they create.”

In early June 2019, ahead of Queensland’s State Treasurer Jackie Trad’s budget, mining companies avoided increases to royalties by agreeing to provide A$70m to a A$100m infrastructure fund. The move means coal royalties will be frozen for three years.

“We have welcomed the commitment from the Queensland Opposition to freeze royalty tax rates for 10 years, and we’d like to see a similar commitment from the Government,” says Macfarlane. “We want to keep employing more Queenslanders and supporting more regional communities through local investment. To do that, it’s essential that we have clear and transparent rules and regulations,” he adds.

Will politics continue to support mining?

Politics and mining often overlap – unsurprisingly given the value of the sector to the wider Australian economy. That was on display during the recent federal election, which saw the industry used as a political tool– particularly Adini’s controversial Carmichael coal mine in the Galilee Basin.

However, the re-election of Scott Morrison as prime minister was welcomed by many within mining, and the almost complete annihilation of Labor’s vote in the state sent a clear message to politicians about how Queenslanders view the sector. Before the election Labor had failed to take a meaningful position on the project but appeared likely to oppose it. The party suffered heavy losses, hampering its ability to have a significant say at a state level. Olive Downs is a case in point, just days after the vote Queensland’s government gave final approval to the project, which had been stuck for years.

Keen to stress the need for a broad political approach to mining, Macfarlane says: “The QRC works with all sides of politics constructively, including the re-elected Coalition Government in Canberra. The Government has been a strong supporter of the resources sector through the Prime Minister and Resources Minister Matt Canavan.

“The resources industry has also welcomed the appointment of Joel Fitzgibbon to the shadow resources portfolio. We want to see bipartisan support for the resources sector and the regional jobs it creates. We want to see the Government and the Parliament focus on attracting new investment to create new jobs well into the future.”

Queensland’s mining industry is a vital part of the economy and has a promising future. However, nothing can be taken for granted and business, politicians, and local communities need to be ahead of the issues the future may bring Macfarlane believes.

“Our sector makes up almost 20% of the Queensland economy but we must not get complacent. We must embrace technology to stay globally competitive, compete for every contract and earn the support of our governments and the people who elect them,” he finishes.