**Check against delivery
Good afternoon ladies and gentlemen and welcome to the WA Resources and Commodities Information and Networking Reception.
Like America, Australia is a commodities powerhouse and Western Australia is one of our most resource-rich States.
We have the world's largest economic demonstrated resources of:
- mineral sands (rutile and zircon)
- nickel
- uranium
- lead and zinc.
We are ranked in the top six worldwide for:
- bauxite
- black coal
- copper
- gold
- iron ore
- industrial diamonds
- manganese ore
- silver
- tantalum, and a handful of other commodities.[1]
And we are a world-class gas province with more than one hundred trillion cubic feet of natural gas undeveloped off our north-west coast. Resources development in the last few years has boomed in Australia on the back of the China boom.
And notwithstanding the current global financial crisis, robust economic growth in China and India will return as they pursue a modernisation agenda, improving their economic infrastructure, and providing the platform for the necessary economic activity to lift hundreds of millions of people out of poverty.
That means, when it comes to investment in resources and energy development, Australia - and Western Australia - cannot stand still.
We have to keep our eyes on the longer term and prepare to meet the inevitable resource and energy demands of the developing world, particularly on our doorstep in the Asia Pacific and the Indian rim.
We have to continue to improve our productivity, invest in our export supply chains, invest in our workforce- through skills and training - and make sure we are ready for the markets of the future.
We need continuing investment in the sector and our relationship with the United States is particularly important in this regard.
The US is currently our largest foreign investor with more than a quarter of Australia's total foreign investment coming from America in 2007.
American companies investing in Western Australia include major international players such as Alcoa, Apache Energy, Chevron, ConocoPhillips, ExxonMobil, Hess and Newmont. And there are many others.
The investment these companies make in Australia plays an integral role in the development of our resources and energy.
We are a country built on foreign investment and we are delighted when foreign companies want to invest in Australia when it is in our national interest and when it facilitates the development of Australia's resources.
While bulk commodity prices are falling and will fall this year and next, I am pleased to say Australia's export earnings are still likely to be higher than 2007 levels.
The forecast increases reflect high contract prices for bulk commodities in place until the end of March 2009 and the recent depreciation of the Australian dollar which has to some extent limited the impact of declining commodity prices.
The wheel always turns in commodity markets and I'm sure our customers will enjoy the upper hand in this year's negotiations after a number of years when we have enjoyed a seller's market and high price rises.
That is how markets should work and just as the Australian Government did not interfere in a seller's market, we will not interfere to prop up prices in the current buyer's market.
Australia is an efficient, stable and reliable producer of commodities at the low end of the cost curve, but now is the time for us to focus even more on productivity and innovation.
The Australian resources sector is supported by strong industry fundamentals, ensuring it is well positioned to respond in the long-term to the current global economic challenges.
There is a lot to be positive about and we are getting ready for the next wave of growth.
We have learnt the lessons of the first China boom which caught Australia by surprise.
While we have met increased demand for our resources, this has placed incredible strain on our export infrastructure such as ports and rail.
It has also meant that new markets have been competing with long-standing ones such as Japan, which has been a partner in Australia's resources development for more than half a century.
And we have not always managed to maintain our levels of service to those markets as well as we have wanted.
We do not welcome a slowing in demand, but we should take the opportunity it provides to allow Australia to make the investment required to improve our export facilities and our customer service, especially those related to resources and energy.
A focus on improving commodity infrastructure will result in Australia becoming an even more capable and competitive commodity exporter.
Western Australia already hosts an impressive 531 commercial mineral projects, including 1032 operating mine sites producing over 50 different minerals.
In 2007-08, there were also 62 operating oil and gas fields in Western Australia.[2]
There are currently 27 projects at an advanced stage of planning in Western Australia[3] and they will be required to service future economic growth.
Combined, the investment involved in these projects totals almost $A44 billion.
While the state is already endowed with significant railway networks and port facilities built specifically for commodity export, planning is under way to expand capacity.
In July 2008 the WA Government selected a preferred tenderer for the construction of a $3 billion multi-user deep water port at Oakajee.[4] In the near future an announcement about the associated railway corridor is expected.
The Australian Government also recognises it has a responsibility to ensure there is sufficient investment in infrastructure.
The Australian Government has established Infrastructure Australia to coordinate our $20 billion investment in the Building Australia Fund.
Infrastructure Australia will develop a strategic blueprint for Australia's future infrastructure needs and facilitate its implementation with state governments and the private sector.
Infrastructure Australia's aim is to plug infrastructure gaps and remove the bottlenecks which hinder future economic growth and prosperity.
It will identify investment priorities, and policy and regulatory reforms to best deliver infrastructure investment.
The need is obvious: there's a lot going on in Western Australia.
Capital expenditure on mining in Western Australia in 2007-08 amounted to $A17.1 billion.
WA is dominant in iron ore and has seen a number of significant new developments and expansions in iron ore production, in particular in the Pilbara and Mid West regions.
WA is also the cornerstone of Australia's LNG industry.
The North West Shelf Project remains Australia's biggest ever resource investment - $25 billion to date.
Woodside's $12 billion Pluto project is in advanced construction and we are looking forward to the next round of investment in Australian LNG.
In particular, the Gorgon project - with two major American participants - Chevron and ExxonMobil - is currently in front end engineering and design - and we are hopeful of a positive final investment decision in the second half of this year.
This project is of vital importance to Western Australia and the nation, and we are working closely with the participants to facilitate its development.
I note that ExxonMobil and Chevron are working on plans to develop the Scarborough and Wheatstone gas fields in Western Australia's Carnarvon Basin.
These developments are also very important to us.
Australia is the world's sixth largest LNG producer with enormous potential for growth.
LNG is one of Australia's most important export industries.
We recognise, however, that LNG is very capital-intensive and the Australian Government is committed to facilitate the optimal use of existing capital investment and orderly and optimal investment in future LNG hubs.
The Browse Basin is a new hub for the future - a world class gas province located off the Kimberley coast of Western Australia.
On 23 December the Western Australian Government announced the selection a site in the Kimberley region for the development of an LNG precinct to process the Browse Basin gas reserves.
The Kimberley region has significant environmental and heritage values. As part of an agreed strategic assessment approach, the site will now undergo a full environmental impact assessment.
I support the development of the Browse Basin LNG reserves and the boost to jobs, investment, export dollars and the positive outcomes it will achieve for regional communities, particularly indigenous people.
I also welcome interest in the potential to develop some of Australia's vast gas reserves for gas to liquids projects that produce ultra-clean diesel.
The Australian Government is committed to ensuring the wealth of our large undeveloped gas reserves is unlocked for the benefit of the nation.
Of equal importance is our obligation to service the clean energy needs of our growing neighbours in the Asia Pacific.
Uranium is also important in this regard and Western Australia is now open for business when it comes to uranium exploration and mining.
The state is an important uranium province with a number of proven resource areas that could mean three or four projects can be developed within the next few years[5].
This is an important growth area for the Australian uranium industry and will help to cement Australia as the world's largest producer and exporter of uranium.
The US is one of our most important uranium customers, currently purchasing around 40 per cent of Australia's uranium to keep the lights on in many American cities.
Australians expect their uranium to be mined in safe hands and supplied to safe hands, and the Commonwealth and Western Australian governments are working closely to implement the necessary regulatory regime for Western Australia's newest resource sector.
I have only touched on a few of Western Australia's wealth of resource assets.
That is not to understate the importance of the state's bauxite, diamond, gold, zinc, copper, lead and nickel resources or the investment these minerals attract.
Alcoa is a very important investor in Western Australia's bauxite industry, adding enormous value through its alumina refining and aluminium smelting businesses in the south west of the state.
Western Australia is open for investment and we look forward to a long and prosperous partnership with American companies in the resources sector.
As an energy and resources superpower we have a responsibility to the world economy to help keep the wheels of commerce turning through reliable and competitive commodity supply.
Australia's resources sector has been built on foreign investment to complement our vast natural resources, social stability, human and intellectual capital, and economic strengths.
Our policy is long standing and non discriminatory.
Australia is committed to open and transparent trade and investment frameworks to underpin resources and energy markets and we work with our trading and investment partner toward that goal.
Ladies and gentlemen, as Australia's Minister for Resources and Energy it is my role is promote and facilitate the development of Australia's resources and energy sector.
Today, however, I turn my focus to Western Australia and I urge you to do the same. Thank you.
[1] Geoscience Australia. Australia's Identified Mineral Resources 2008. Page 1.
[2] Western Australian Mineral and Petroleum Statistics Digest 2007-08, WA Department of Industry and Resources
[3] Source: ABARE Minerals and Energy Major Development Projects - October 2008 listing. Of the 27 WA projects, there are six energy projects, 18 mining projects and three minerals processing projects.
[4] http://www.mwdc.wa.gov.au/Oakajee%20Deep%20Water%20Port.aspx
[5] Timeframe: 3-4 years