Australia was becoming a riskier place for miners to do business than South Africa, the head of the world's third biggest gold miner, AngloGold Ashanti, said today.
Australia was becoming a riskier place for miners to do business than South Africa, the head of the world's third biggest gold miner, AngloGold Ashanti, said today.
Speaking at a health and safety conference in Perth, AngloGold's Australian-born chief Mark Cutifani said a range of proposed government initiatives, including higher royalties and carbon emissions trading scheme, were a major threat to Australia's international investment standing.
"Australia in many ways is probably one of the most difficult jurisdictions, and on the basis of government policy discussions, looks like its going to be even more difficult," he said.
"I would see more sovereign risk here than I see in South Africa quite frankly."
Mr Cutifani identified government policy directions on "carbon tax, resource tax, royalties, the cost of doing business and infrastructure," as the key areas of concern for AngloGold and all Australian miners.
"When you add all those issues up, and the continuing movement on the policy front, it is very concerning for anybody thinking about mining, given mining's contribution to Australia's economy over the last few years," he said.
"The debate doesn't seem to be paying attention to the positive things the industry has done."
Mr Cutifani's comments come as premier Colin Barnett pushes for a doubling of the gold royalty rate to 5 per cent of revenue, and rumours the federal government is considering a resources rent tax on mining profits, similar to that applying to the oil and gas sector.
AngloGold has been one of the loudest voices opposing an emissions trading scheme or carbon tax, arguing it would seriously erode the viability of major new gold investments such as its planned $US600 million Tropicana gold mine 300km north-east of Kalgoorlie. The company hopes to approve development of the remote project by the end of the year.
"(But) I can't guarantee a commitment beyond the completion of the feasibility study until we understand all the changes the government is talking about and how they may impact the viability of the project," Mr Cutifani said.
Mr Cutifani said Australia was still a "great place to do business", given its geological potential, strong skilled labour base and miners' "generally good relationship with regulators".
But he said he was concerned at the push to squeeze already tight margins, which were only just starting to recover after a decade of "very poor returns" by the gold sector.
Though gold prices were booming, Mr Cutifani said few seemed to realise how significantly costs had risen as miners were forced to mine deeper and more difficult orebodies in ever more remote locations. Consequently, even at current prices, most gold miners were generating margins of only 5-10 per cent, he said.
"So I think there needs to be a balance in the conversation, that's all that I am saying," he said.
