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Wednesday, 18 September 2013
Coalition says "nuh-uh" to mining investment cliff...
There has been a lot of talk about a mining investment cliff in Australia and indeed mining investment is forecast to fall:
Does this mean we are headed for a recession as some people have been predicting for the last 4-5 years? I don't believe so. More likely, I'd say, that we'll see low interest rates to stimulate the economy and a new government which looks to spend heavily on infrastructure while incentivising businesses to invest.
Now, whether or not you agree with the below - that is a whooooole other argument. Mining is an exceptional industry, which attracts exceptional treatment...first on the hit-list will be Woodside's colossal Browse project.
"RESOURCE giants will be told to step up their spending on mammoth new projects or risk losing their rights to tap the deposits, under an Abbott government plan to accelerate investment and kill off fears of an end to the boom.
The incoming government aims to use its power over the vast gas deposits to bring forward up to $180 billion in new investment, sending a blunt message to companies to develop rather than hoard the nation's resources.
As Tony Abbott and his ministers prepare to be sworn into office today, the resource plan marks another stage in an economic agenda that promises to lift growth, but will depend on stronger business investment to deliver results.
Incoming industry minister Ian Macfarlane told The Australian that companies should extract "every molecule" of gas to boost exports and supply the domestic market.
Mr Macfarlane warned that companies that shelved their projects could lose the "retention leases" they held over the reserves, given the commonwealth's power to revoke the rights as they came up for renewal over the next few years. "I want to put the industry on notice that if the deposits are able to be developed they've got to be developed," he said yesterday as he arrived in Canberra for briefings.
"We've got to make sure that every molecule of gas that can come out of the ground does so. Provided we've got the environmental approvals right, we should develop everything we can."
The policy is expected to be put into place in coming days as Mr Macfarlane meets officials to review a list of retention leases that expire during this term of parliament, triggering talks with companies over their plans.
The priority is expected to be Woodside Petroleum's enormous Browse project, which is on hold as the company seeks approval from federal and West Australian governments to build an offshore "floating" LNG facility rather than build a hub at James Price Point north of Broome. Woodside's requirements include a variation in the retention leases over the Browse reservoir.
In his first interview since the election on the outlook for the resources sector, Mr Macfarlane rubbished Kevin Rudd's claims during the election campaign that the "China boom" was ending. Mr Macfarlane argued instead that Labor had slowed the sector by imposing the carbon tax, the mining tax and a tax on oil condensate, as well as launching personal fights with industry leaders such as Gina Rinehart and Andrew Forrest.
"That whole chapter's been slammed shut," Mr Macfarlane said. "We're opening a new chapter about working with the industry, creating jobs and making Australia an energy superpower."
Companies across the sector are prepared for the talks over project timeframes and their retention leases, given pressure from former Labor resources minister Martin Ferguson to develop their deposits.
About $200bn is being spent on seven LNG facilities across the country, according to the Australian Petroleum Production and Exploration Association.
Another $180bn would be invested if companies signed off on a further list of projects, according to a study for APPEA by consulting firm McKinsey, although this includes coal-seam gas projects as well as the offshore deposits covered by retention leases."
Newly-elected governments and central banks don't tend to sit back and allow an economy to slide gently into recession and I doubt this one will.