Industry Comment


The future of an Australian magnesium industry

Co-operative Research Centre for Cast Metals Manufacturing, and CSIRO

Australia has the potential to become the world’s foremost light metals producer if projects such as AMC’s Stanwell magnesium plant go ahead.

The nation is on the brink of becoming a major magnesium metal producing country, but its magnesium industry needs to be supported now, or there may never be a magnesium industry in this country.

Australia has a $9 billion alumina and aluminium industry, built on its natural resources combined with science and technology, and has great potential for similar industries in both magnesium and titanium.

Unless some of the risks that were taken to establish an aluminium industry almost 50 years ago are now taken to establish a magnesium industry, Australia will lose out on an important new global market.

World-wide demand for magnesium is forecast to rise by 200 per cent in the coming decade.

The use of magnesium in the transport sector has grown by 12 per cent every year for the last 13 years.

Magnesium is an important ingredient in the quest to light weight the 50 million motor vehicles produced annually world-wide.

Light weighting improves fuel efficiency and safety while reducing the emission of greenhouse gases.

Australia is in a perfect position to lead the world in the application of magnesium to the automotive sector and to reap the rewards of supporting this fledgling industry.

There is also rising demand for magnesium in the telecommunications sector for use in computer and mobile phone casings, digital cameras and a range of other components.

With AMC’s support, Australia is leading the world in the development of new technologies for the magnesium industry.

Without an Australian company to commercialise these new products the full benefits of such research may be lost to our country.


Property rights in water

Pastoralists and Graziers’ Association

Comments by Federal deputy leader John Anderson last week that the Government is developing a new Inter Governmental Agreement on Water are welcome.

WA and the other States have ignored many of the requirements of the 1994 Coalition of Australian Governments agreement on water reform, and now the Federal Government appears to be ready to pull them back into line.

However, some of WA’s key food producers may already face a financial crisis because of the State Government’s refusal to address their property rights in water.

The dairy, vegetable and fruit industries in particular are in jeopardy, because the removal of water titles from their freehold property titles is threatening their borrowing capacity.

Major changes to water use were imposed under a CoAG agreement on water reform signed between the State and Federal Governments in 1994.

The State Government has taken control of water, and is moving to license and charge WA’s key water users, but has failed to heed warnings from the major banks and industry groups that they have left landowners and irrigators without adequate borrowing security.

The Government’s water agency, Water and Rivers Commission (now Department of Environment), has consistently refused to address water access and equity issues with the industry.

They are issuing commercial water licences on an ad-hoc, short-term basis that not only denies farmers the certainty they need to develop and plan ahead, but is also causing banks to remove them from their lists of favoured lenders.

Farmers accept the need to achieve more efficient use of water via some form of reform.

However, security is currently missing from the water reform equation in WA.

Without adequate security for finance, farmers cannot invest in essential new water-use technology.

For example, if the Government is only prepared to give a one-year water use licence, how can a farmer invest $500,000 or more in a highly water efficient, pivot sprinkler system, or a new trickle irrigation program?

Even irrigators who have constructed dams at their own expense, may be forced to release some of their water for the environment without compensation, and are now expected to pay heavy new charges to keep a rapidly growing army of water bureaucrats in jobs.

The current "first-come-first-served" system of water allocation, and the "use-it-or-lose-it" threat in WA also carries enormous potential for corruption.


AWB structures and rules

Pastoralists and Graziers’ Association

The Australian Bulk Handlers Association’s new challenge to the cost structures and business rules of AWB Ltd is welcome.

AWB, which charges a minimum $45 million automatic administration fee annually - even in a drought year – has yet to respond to an offer by Western Australia’s grain handler to cut $40 million a year from wheat supply chain costs in WA.

AWB is alienating more and more people in the industry in its attempts to justify the excessive profits it is making under its buying monopoly.

The relaxation of AWB’s business rules will allow the bulk handling companies to provide more and better services to wheat producers across Australia.

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