The Australian – Oct 11, 2016 – Japanese steelmakers have joined local iron ore producers in a rebellion against “job-destroying” plans in Western Australia to hike iron ore mining royalties to raise $7.2 billion.
Plans from WA Nationals leader Brendon Grylls to hike royalties from 25c to $5 a tonne came under strident attack from mining executives from both countries at this week’s Australia-Japan Business Co-operation Committee in Melbourne.
The comments came as BHP Billiton’s Arnoud Balhuizen warned the tax grab would “destroy jobs and community investment” in WA, while Rio Tinto’s Chris Salisbury described it as a “potential hurdle of huge proportions” in a conference session.
Co-chairs of the conference, businessman Sir Rod Eddington and Nippon Steel’s Akio Mimura, both used the post-event press conference to criticise the move and warn it sent a strange signal and would put investment at risk.
“Both the timing and the magnitude of the increase were clearly a concern yesterday in the resources session,” Sir Rod said.
“Increased taxes invariably have an impact on enthusiasm for future investment.
“They ultimately have an impact on price to the customer, and given the importance of iron ore to regional Western Australia in particular, what will this do to the companies’ appetite to make the investments they have in the past?”
“Given the hard work the major producers have put in over the last three or four years to make their businesses more productive, and therefore be able to operate for a sustained period with lower prices, this potential substantial increase represents a setback.”
Mr Mimura, the honorary chairman of Nippon Steel and Sumitomo Metals Corporation, a foundation partner, customer and stakeholder in the Pilbara, said there was a glut of iron ore globally and cutthroat competition between producers.
“In this context, in any particular region, if a tax is going to be raised, that tax cannot be translated to the price to customers,’’ he said.
“It means the tax increase will directly hit the revenue and profit structure of the producing companies, so I think the proposed tax would bring in a lot of difficulty.”
Reports suggest embattled WA Liberal Premier Colin Barnett has rejected the tax hike plan, but miners fear it will gather momentum as WA prepares to go to the polls next year.
Mr Balhuizen, president marketing and supply for BHP, relayed to the conference objections raised by fellow miners, including Mr Salisbury, CEO of Rio Tinto’s iron ore business, who described it as “a potential hurdle of huge proportions”.
“Our message to political leaders in WA needs to be very, very clear,” Mr Balhuizen said. “This proposal would harm the competitiveness of the entire mining sector in WA, and possibly the rest of Australia. It would destroy jobs and community investment in the state.
“Both Rio and BHP Billiton, together with their joint-venture partners, already make a significant economic contribution in WA through taxes, royalties and community investments.
“Our Japanese customers should be equally concerned about the impact of this proposal as it threatens Australia’s long history as a reliable low-cost supplier of iron ore and other natural resources.”
The conference, which attracted a record 440 delegates from companies with a combined worth of $US975bn ($1.29 trillion), ended yesterday with agreement between the Japanese and Australian sides on the need to pressure the US to push ahead with ratifying the Trans-Pacific Partnership trade agreement.
Sir Rod and Mr Mimura said the TPP would boost global trade, economic wellbeing and productivity, and should not be derailed by the drift towards protectionism during the US election campaign, in which both candidates have come out against the pact.
The trade agreement draws together than main economies of the Asia-Pacific region with the exception of China.