SUBJECTS: Mining boom, Olympic Dam expansion decision
QUESTION: What’s the status of the mining boom?
FERGUSON: Well anyone with half a brain knows today’s record commodity prices are over. The boom in commodity prices is over. But, we are also the envy of the advanced economic world. For us the expansion goes on- $270 billion in committed capital investment; go to Gladstone, 12,000 jobs in construction at the moment; go to Barrow Island, 4,000 jobs in construction; our job is to consolidate, expand capacity, and therefore make up the drop in commodity prices in terms of our economic future. That’s the reality of life.
QUESTION: Does that mean the mining boom is over?
FERGUSON: The mining boom, in terms of construction, is not over. It speaks for itself; $270 billion in committed capital investment. Gorgon is $43 billion alone, Gladstone is $55 billion, Icthys in Darwin is $34 billion, 12,000 jobs at Gladstone in the Hinterland, 4,000 on Barrow Island. Our job, unlike the previous government, is not just to live off the back of the record commodity prices we have had for a short period, but to deliver these projects, expand capacity and therefore earn higher earnings as a nation through expansion of capacity.
QUESTION: On radio this morning when you said the mining boom was over, you meant that the boom in commodity prices?
FERGUSON: The boom in commodity prices is over. No one can deny it. Just think about it, coking coal a short time ago was $320 a tonne, it’s now $220 a tonne; iron ore was $180 a tonne, it’s now $105; thermal coal was $220 a tonne, it’s now $80 a tonne. It was great for a short period of time, I think it will be a long time before we see those record commodity prices again. But on this occasion, unlike the Howard Government, when we last had a resources boom, we’ve got $270 billion in committed capital investment. That means we extend the benefits of the mining boom, in terms of grabbing additional capacity and further job creation in Australia.
QUESTION: So you agree then with Penny Wong that the mining boom is still going?
FERGUSON: Penny Wong and I are saying the same thing. She said that she’s reflected in the terms of trade, from a budget point of view, the drop in commodity prices. That is a fact of life; neither I nor Penny can deny it. What we’ve got, unlike other countries is $270 billion in committed capital investment, creating jobs and wealth all around Australia. The challenge to Australia is to actually deliver that capital investment, to expand capacity. And in terms of the $230 billion planned capital investment in Australia, to give the necessary investors all the regulatory approvals so that at the right time, that $230 billion becomes a reality, we have half a trillion as a pipeline of investment in Australia.
QUESTION: People see this in very simple sort of headline terms, and their question is: is the boom over?
FERGUSON: The commodity prices boom is over, but in terms of investment in Australia the boom continues; $270 billion in committed capital investment creating jobs for Australia at the moment. People have a desire to work in the mining industry. 4,000 jobs at Barrow Island, the Gorgon project, 12,000 jobs in terms of construction in the LNG sector at Gladstone and in the Hinterland. This construction boom will continue, but the days of record commodity prices are gone.
QUESTION: As a former head of the Union movement, do you have any concerns about the Prime Minister and the AWU, the allegations that are still kicking around after seventeen years?
FERGUSON: The Prime Minister’s clearly said that she’s done nothing legally wrong. If anyone’s got anything of substance then put it on the table and argue it out.
QUESTION: It’s not legally wrong but, I mean, is there something ethically wrong in your assessment of what was taking place?
FERGUSON: I’m not on top of the details of the AWU or any other union. I was president at the time; this was not common knowledge in the union movement. The Prime Minister clearly said she’s done nothing legally wrong, she’s also challenged people to actually put on the table and substantiate any claims.
QUESTION: Is this causing any concerns within the Caucus that this is back and doesn’t seem to be going away?
FERGUSON: Look, I don’t see Caucus members very often to be honest and no one has raised this with me. The truth is we’re too busy chasing investment and delivering what we’ve got as a nation; making sure we position Australia for the future. That’s our priority to concentrate on policy in Australia.
QUESTION: Do you think the Prime Minister could nevertheless clear the air with a statement to Parliament as it has been suggested?
FERGUSON: The Prime Minister has clearly said she’s done nothing legally wrong. She also challenged those that are making these claims to substantiate them.
QUESTION: Mr Ferguson, sorry I’ve just arrived, but can I just get you to clarify that statement you made this morning about the resources boom, do you think it is over?
FERGUSON: The commodity price boom is over. Anyone with half a brain knows that. Just think about this, coking coal down from $320 a tonne to $220 a tonne; iron ore down from $180 to $105 a tonne; thermal coal down from $220 to $80 a tonne. The difference is whilst the resources boom is over from a commodity price point of view, we are so well positioned; $270 billion in committed capital investment, construction underway in Australia at the moment, creating wealth and spreading the benefits of the boom to all Australians.
QUESTION: So is that what your colleague Penny Wong meant this morning the mining boom has a long way to go?
FERGUSON: If you actually go and have a look at what Penny Wong said, she actually talked about the terms of trade. She has made the necessary adjustments with the treasury in terms of the budget forecast. She then went on to say that yes the construction boom will continue, that is a fact of life. If you actually analyse the different aspects of what all Ministers are saying, they are saying the same thing. No Minister is saying anything contrary to what I’m saying: that the commodity price boom is over. I live and breathe these projects day in and day out. I say to Tony Abbott, Marius Kloppers is no shrinking violet. If you have any doubts about it go back and have a look at the footage of the mining tax debate. He expressed his view and took on the Government. The BHP Billiton board made a decision yesterday that at this point in time the Olympic Dam project is a challenge from a capital point of view. They will rework the project. I will work with BHP Billiton and the South Australian Government to deliver this project. It’s got a potential mine life of 100 years. It’s about time Tony Abbott stopped talking down Australia both at home and abroad and accepted that we are well positioned as a country.
QUESTION: The Opposition says that it is diplomacy that prevents Marius Kloppers linking this to the mining tax and the carbon tax, you speak with him privately, has he said to you, Marius Kloppers or Jaques Nasser said to you that concerns about the Olympic Dam are in fact at least in part because of the mining and carbon tax?
FERGUSON: I have lived and breathed Olympic Dam for almost five years as a Minister and a couple of years as a Shadow Minister. This is the second iteration of this project. The current proposal is smaller than the last project in terms of the ambition of BHP Billiton. No one would describe Marius Kloppers or Martin Ferguson as diplomats. We have discussions, he expresses his view and he said it publically yesterday. I will take Marius Kloppers word any day ahead of Tony Abbott.
QUESTION: But he’s never said to you privately these taxes are a factor in the Olympic Dam project decision?
FERGUSON: We have talked about the challenging nature of the project, obviously as I should, about the fact that for five years you’re removing overburden earth, with no income coming to BHP Billiton while you do it. Shovelling cash out the door to create a pit bigger than the Adelaide CBD, (interjection) that’s about saying we’ve got everything we want, we cannot ask any more of your Government or the South Australian Government. It’s a commercial decision; it’s a question of whether we can fund it at this point of time, because when the boards of these major companies meet they’re considering a range of investment decisions from different divisions.
QUESTION: Has he spoken to you privately to say that the taxes….
FERGUSON: As Marius Kloppers said yesterday publically and in all my private discussions with him, he has not said there is any problem from a carbon tax or mining tax point of view in terms of the Olympic Dam project. Just think about the MRRT, it does no apply to copper or Uranium, it doesn’t apply. Let’s deal with the facts.
QUESTION: Tony Abbott made the point this morning though that while the tax may not apply to the specific minerals being mined in that project it does apply to the company, they do need to pay the tax, that does go to the environment in which the company operates, what’s your response to that?
FERGUSON: Marius Kloppers signed an agreement with the Prime Minister to implement the MRRT on the basis that in his opinion the outcome was reasonable and BHP Billiton should pay the MRRT to the Australian community, which is assisting spreading the benefits of the resources boom to Australia. He made the assessment of what the company could bear and his responsibilities to the one off opportunity to actually develop Australian resources. It’s his signature on the agreement, as is it mine and the Prime Minister’s.