Stand by for another miners' scare campaign

By Terry Ryder, 19th April 2012

Something big is afoot when mining companies start running warm and fuzzy television ads and threaten to close mines.

It means the miners are embarking on a serious negotiation with an adversary, usually a government run by the ALP or unions representing mining workers.

Scare campaigns are a core negotiating tactic for the mining industry.

Almost exactly one year ago that I wrote this in The Australian: If you want to know what the leadership of mining companies really believes, ignore what they say and watch what they do. We are in the midst of the third scare campaign orchestrated by big mining in the past three years. The previous two were targeted on the Carbon Pollution Reduction Scheme in 2009 and the Resources Super Profit Tax in 2010. Now they have Julia Gillard’s carbon tax in their sights.

What we are seeing is a program of measures to scare the public. Before big business sits down to negotiate, it likes to manipulate the emotions of ordinary citizens to place pressure on politicians so they’re malleable by the time they get to the table.

I said then, and continue to believe, that the actions of big miners run contrary to their words.

In 2010 Swiss miner Xstrata claimed to have scrapped its $6 billion coal mine at Wandoan in Queensland while still buying up land around the town to facilitate the project. A few months later it succeeded in gaining government approval to proceed. Since then it has fought hard to win a court battle to overturn environmental opposition – and now, having won the case, is ready to build this giant enterprise.

There have been other examples like this in recent years.

Now BMA (the BHP Billiton Mitsubishi Alliance) says it’s going to close its Norwich Park mine near Dysart in Queensland’s Bowen Basin.

When this news broke, many observers were flabbergasted: the coal industry is embarked on the greatest expansion phase in Australian history in response to unprecedented demand from India, South Korea, China and other Asian nations.

While BMA was claiming it would close Norwich Park because it couldn’t make any money there, AngloAmerican was announcing it was spending $2 billion to double the size of its coal mine at nearby Moranbah – where, incidentally, BMA is spending $4 billion to expand an existing mine and build a whole new one.

Apparently it makes more financial sense to build a new mine from scratch than keep an existing one operating.

The most interesting thing for me, in the days after BMA’s closure announcement, was the reaction of property investors who own real estate in Dysart. They all seemed quite calm about the prospect of 1,400 jobs being lost in a town with a permanent population under 4,000.

Why? Some of them suspect the mine isn’t closing. They think the miner is simply “negotiating”. BMA has been fighting unions over pay and conditions at Norwich Park for the past 18 months, amid strikes and rolling stoppages.

It’s the same in nearby Moranbah. BMA has been refusing to sign new leases for houses because the forces of supply and demand have pushed up rents to levels the miner doesn’t want to pay. Landlords appear unperturbed at this game of bluff.

Part of the general mining lobby rhetoric claims that the carbon pricing scheme and the minerals tax will close mines and costs tens of thousands of jobs. Opposition Leader Tony Abbott has been vocal on this and says he’ll scrap the so-called carbon tax if he becomes Prime Minister.

Privately, mining industry people admit none of this is true – and any member of the public who’s been paying attention knows it as well. Not one mining project has been scrapped. Instead, $500 billion in new ones have been started or committed in full knowledge of the carbon scheme and minerals tax.

Here’s what speakers said about this at a recent conference I attended in Gladstone.

Queensland business legend Everald Compton, who heads companies that build coal mining infrastructure like rail links and export ports, said: “I agree with the principle of a carbon tax, People who say it’ll bring Australia down are talking absolute nonsense. Miners I talk with are saying: ‘If we handle this right it won’t cost us a lot of money.’

“I support the principle of it and every business has to adapt itself to it. And it won’t be repealed. When Abbott says it will be repealed he’s talking absolute nonsense. It will be so far advanced by then it would be an act of lunacy. The carbon tax is here to stay.”

Author and broadcaster Dr Keith Suter said: “The carbon policy won’t have as dramatic an impact as some people have claimed.”

On the subject of a future PM Abbott reversing it, Suter said: “I agree with Everald Compton. It would be difficult to do so. Politicians in opposition promise all sorts of things but once they get into government they find it’s not so easy.”

The best advice amid the latest mining lobby rhetoric is: wait and see what really happens.

ENDS

Terry Ryder

Terry is the owner and creator of hotspotting.com.au, which provides information to property investors on how to identify emerging markets before they’re common knowledge.

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