Tianjin
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Introduction
I thank the Ministry of Land and Resources and the Tianjin Municipal Government for hosting one of the most important trade events of its kind in the world.
The Mining Congress provides policymakers and industry leaders a chance to develop relationships and collaborate on new opportunities.
Australia is well known as being a stable and reliable supplier of minerals and energy.
We’ve worked hard to develop and maintain this reputation and I believe it is well-deserved.
It’s a reputation that remains intact despite changes to taxation arrangements within Australia, and it’s a reputation that is built on strong foreign investment.
Resources growth
Resources have been a staple of Australia’s economy since the famous Gold Rush of the 1850s.
And for a number of decades now, Australian raw materials have been supporting economic development across Asia.
Australian resources have been essential to the modernisation of Asian cities and businesses.
Whereas other countries mine to supply their own domestic consumption, and export their surplus, Australia mines for the world.
Despite our long mining history, in recent years Australia has really pushed ahead and set new records for its resources development.
Currently, Australia has 94 energy and minerals projects at an advanced stage of development.
Between them, they are worth $173 billion in planned capital investment.
Australia’s iron-ore production based on iron content is 273 million tonnes a year.
Of that, 92 per cent is exported.
As countries begin to reduce their carbon emissions from power generation, natural gas is starting to realise its potential as a staple source of energy.
It’s no surprise then that China is among the world’s fastest-growing LNG-import markets.
Next year, in fact, you expect to bring in 13 million tonnes of LNG, 22 per cent more than you are importing this year.
In the last three years we have seen some huge investments in natural gas on the west coast of Australia—for instance, take $43 billion invested in the Gorgon project and, most recently, $29 billion in the Wheatstone project.
Meanwhile, on the east coast of Australia, the city of Gladstone in Queensland has been transformed by three coal seam gas to liquefied natural gas projects totalling $45 billion of investment.
In light of this, I am pleased that the China National Offshore Oil Corporation has signed one of the largest LNG contracts in Australia’s history.
It’s also a world-first – the first fully-termed sale and purchase agreement for the supply of LNG from coal seam gas.
Mines and infrastructure
Of course, all this activity would achieve little without the right infrastructure to move the natural resources around.
Australia’s long history in exporting its resources has put us on the front foot in developing our infrastructure.
This has been especially important in the coal sector.
Currently, Australia’s coal-export capacity is 391 million tonnes per annum.
An additional 111 million tonnes per annum of new coal-terminal port capacity is coming online by 2015.
Port Waratah Coal Services, for example, will take its terminal capacity at Newcastle to 133 million tonnes per annum.
Nearby, there’s a $1.4 billion investment program to upgrade the Hunter Valley coal rail system.
And across the border in Queensland, a $3.7 billion investment program in the Blackwater rail system will service the coal terminals at Gladstone.
By building our capacity for exporting our resources, Australia is demonstrating its confidence in the continued economic expansion in our region.
Australia and foreign investment
Australia has always been a sparsely populated country relative to a continent of its size.
That’s why Australia is a country built on foreign investment – especially in the resources industry.
By attracting overseas investment, Australia has been able to expand beyond the limits of our own domestic investment.
We are delighted that foreign companies want to invest in Australia because of the shared prosperity it creates.
In 2010, approved investment from China in Australia reached $16 billion.
Most of that was in the mineral resources sector, making China by far Australia’s third-largest investor.
By investing in Australia you are also investing in China’s future as modern industrialised economy.
Australian Government policy is that all foreign governments and their related entities, such as sovereign wealth funds and state-owned businesses, should notify the Government for prior approval regardless of the value of the investment.
Australia applies national-interest tests equally to all investments by foreign governments and related entities.
We do this on a case-by-case basis, regardless of origin.
The same is true of every nation when assessing foreign investment proposals.
Last year, we changed the law to reduce unnecessary compliance costs for investments that would not raise national-interest concerns.
These reforms, in turn, reduced the paperwork associated with investing in Australia.
Australia welcomes foreign direct investment from China – the figures speak for themselves.
Between 2007 and last year, we approved more than 3,500 Chinese investment proposals worth $50 billion.
Of the 3,500 Chinese proposals, only six had conditions imposed on the proposed investment.
No proposals were rejected and Chinese mining investment proposals in the period totalled $43 billion.
Media reports of changes being made to the disadvantage of Chinese investors are simply false.
It has always been the case that all foreign government related investors must seek approval at both the exploration and mining licence stage.
Taxation
Let me assure you that foreign investment continues to pour into Australia despite changes to the tax system.
A Minerals Resource Rent Tax will apply from July next year.
It covers iron ore and coal, while the existing Petroleum Resource Rent Tax will be extended to all onshore oil and gas production.
The design of the tax system strikes a careful balance.
On one hand, it ensures all Australians receive a fair return from the use of the nation’s taxable resources.
And on the other hand, the tax is not a disincentive to investment.
Projects achieving normal long term rates of return will not pay the tax, which will only be paid in periods of high prices and so investment in Australia’s resources sector continues to be very attractive.
The evidence can be seen in the large number of resource projects which have been given final investment approval in the year since the tax was proposed.
These include many of the iron-ore projects from BHP Billiton and Rio Tinto in the Pilbara.
Since the MRRT was announced in July last year, no fewer than 42 project announcements have been made.
And nearly half of those covered projects that would be liable to a resource rent tax.
Sinopec, along with Origin Energy and ConocoPhillips, was behind one of the biggest such announcements.
Their coal seam gas to LNG project is worth $14 billion.
If announcements like these are any guide, Australia continues to be a very attractive place to invest.
Coal mine safety
“Responsibility” is a key theme of this Congress.
And our responsibility to the people who work in mines goes beyond paying their wages – it means ensuring their safety, too.
Sadly, none of us has a perfect record on mine safety but Australian practices are recognised as being some of the best in the world.
To that end, I am glad that China and Australia are making progress on a Coal Mine Safety Demonstration Project.
The project in Hebei Province has Australian and Chinese representatives from industry and government.
The objective is to improve the safety awareness of the workforce, as well as safety-management capability and safety technology, at the Xuandong mine.
The project will include technical studies of potential hazards, such as ventilation, and training for mine workers.
As part of it, four Chinese delegations are visiting Australia for technical tours of the mining industry.
It is exactly this kind of collaboration that will pay dividends for years to come – and a fine example of what this Congress aims to achieve.
Conclusion
Ladies and gentlemen, I believe the best is yet to come for the trading relationship between China and Australia.
Plans are coming together for unprecedented activity in the development of minerals and energy in Australia.
And the proposal to introduce a mining tax has not slowed foreign investment in our mining sector.
As we all seek greater prosperity for our people, I am confident that Australia will continue to be a valuable trading partner to all the countries in our region.