CFMEU: 3 June 2010There is much breathless reporting today of Xstrata’s announcement it is suspending investment in two major Queensland projects over the resources super-profit tax (RSPT): a thermal coal operation at Wandoan and expansion of the Ernest Henry copper mine near Cloncurry.
“The RSPT has created significant uncertainty for the future of mining investment into Australia,” declared Xstrata boss Mick Davis in the announcement.
But this ‘announcement’ smells to high heaven of scare-mongering over the proposed tax reform.
The Wandoan project was a very long way off and highly speculative. Xstrata’s February announcement of the project – which it claimed could potentially produce 100 million tonnes a year – was part of a cynical ploy to intimidate other potential investors in the area. (Australia currently exports about 270 million tonnes of coal per year, so the idea that this operation would bring on 100 million tonnes of capacity was always fanciful.)
Just as cynically, Xstrata has four months later declared the project to be ‘suspended’, claiming 3,000 as yet non-existent jobs are ‘at risk’.
As for the Ernest Henry Copper mine – we know that world copper prices are on the way down – a much more likely explanation of today’s announcement 60 contractors’ jobs would go.
But Australian coal is still going strong – as we saw last week our major coal players including Xstrata are willing to pay well above market rates to buy Queensland Rail’s coal lines.
Kevin Rudd made an obvious point today when he remarked it was ‘passing strange’ that the suspension announcement would be made today, with 12 months to go before the legislation was drafted and 24 months before it was introduced.
