26/06/2007 - 22:00

Overcoming the philosophical split on approvals

26/06/2007 - 22:00

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At a time when the state government is reviewing several contentious resource projects, one of its top business advisers has questioned whether the mining industry can be trusted.

Brendan Hammond is an unlikely critic of the mining industry. He has more than 25 years’ experience in the industry, rose to be managing director of Rio Tinto’s Argyle Diamonds, and was recruited two years ago by the state government to improve project approvals.

With that sort of pedigree, you’d think he would see eye to eye on most issues with people like mining entrepreneur Michael Kiernan.

Far from it. Their different philosophies personify the ongoing debate about finding the right balance between development and the environment.

Mr Hammond, who reports direct to Premier Alan Carpenter in his capacity as project approvals coordinator, is highly critical of the industry.

He said government and industry “need to be rightfully ashamed of what we have created” in the Pilbara, and is concerned the same mistakes could be made again.

Commenting on the controversy over planned iron ore mines in the Mid-West and the Pilbara, he said the industry was losing a chance to win community trust.

Importantly, he said, this could have a bearing on future policy settings.

“The opportunity that is being lost here is for the industry to present itself to the community as an industry that can be trusted.

“What [the industry] has actually said here is that left to our own devices, we ought to put the bulldozers in.

“That’s the hard reality of what those decisions say, and that has a direct impact on legislative reform and the approvals process.”

Mr Hammond’s comments come at a time when the state government has to make some hard decisions on major resource projects.

The government is under industry pressure to overrule the Environmental Protection Authority, which recommended that planned iron ore projects in the Mid-West and the Pilbara should not be approved because of their potential environmental damage.

Industry believes the EPA’s stance in the Mid-West, where it is seeking to protect rare flora on banded ironstone formations (BIFs), could threaten all new iron ore projects.  

It also believes the EPA tipped the balance too far towards conservation when it recommended that Rio Tinto should not be allowed to build a new mine in the Pilbara.

Mr Hammond, by contrast, said the EPA was simply doing its job. He believes industry should develop new ways of mining ore bodies so it does not threaten the survival of species, even if the species at risk is small and hitherto unknown.

“When you have lost a species, there is no going back,” he said.

Veteran miners such as Mr Kiernan, who chairs six companies including Monarch Gold and Precious Metals Australia, find it hard to fathom the current thinking.

“How scandalous is the EPA coming out and saying there will be no mining in the BIF areas,” Mr Kiernan said.

“That’s like saying there will be no more swimming at Cottesloe.”

He said big companies could generally cope with the delays associated with project approvals, but small companies struggled.

Mr Kiernan goes so far as to say that Australia lost control of iron ore miner Portman because its commercial fortunes were damaged by environmental delays. US company Cleveland Cliffs subsequently swooped on Portman and gained control.

“That environmental department cost Western Australia Portman,” Mr Kiernan said.

“No-one will stand up and say, because they wanted to worry about a flower that grows in every part of Kings Park, that cost Portman to be owned by the Yanks.

“I get pretty uptight about this.”

Messrs Hammond and Kiernan agree on at least one point – government agencies are under pressure because of the loss of experienced staff.

“We have an emerging critical shortage of manpower across the agencies,” Mr Hammond told WA Business News.

He believes the drain on corporate knowledge has been felt particularly hard.

Mr Kiernan said the shortage of experienced staff is affecting the approvals process.

“They have got a lot of young people in there and they are running it by the book, and that slows the process down,” he said.

“They are dotting the i’s, crossing the t’s, doing the pedantic steps. The old fellas knew what was required, what was important.

“Today, unfortunately, people are focused on the process and not the end result. The process is more important than the end result; that is abysmal.”

Mr Hammond wants more recognition for the good work being done by public servants.

“There are lots of damn good civil servants and they work as hard if not harder than most of the corporate denizens of the terrace, they really put the hours in, and there is just nothing positive they get as feedback,” Mr Hammond said.

More fundamentally, he disputes the claim that government is simply process driven.

He said all agencies involved in project approvals had to meet defined timelines (see next article) and rightly focused on both the process and the output.

“Without the timelines in place, you could argue that it was all about process,” Mr Hammond said.

“But now that we have got timelines in place and we are measuring the agencies and they are largely meeting timelines, to say they are focused on process belies the facts.”

Chamber of Minerals & Energy chief executive Tim Shanahan said that even if agencies were meeting their timelines, there was still industry concern about project approvals.

He said the issue went beyond the formal approvals process to the wider policy and strategic context.

“The sentiment of industry is that WA is not doing well in that area,” Mr Shanahan said.

He insists that the chamber’s members are committed to sustainable business practices and accept the need for a community licence to operate.

Mr Shanahan also questions the benefits flowing from what he said were costly and time-consuming regulation, such as the rules governing the clearing of native vegetation.

“You have to ask the question: what environmental benefits have come from applying those higher standards?”

Association of Mining & Exploration Companies policy manager Ian Loftus said WA could learn a lot from South Australia, which has been winning an increased share of exploration spending.

“There are companies that are no longer active in WA because it is too hard,” Mr Loftus said.

Mr Kiernan is one who believes the current policy settings will be damaging in the long term.

“Its not going to affect WA in two years’ time but I’ll give you the tip, in five to 10 and 20 years we are going to be in trouble,” Mr Kiernan said.

For his part, Mr Hammond is not wedded to the current policy settings, and sees merit in an accelerated risk-based approvals process driven by industry so that government does not have to act as gatekeeper.

However, he sees one major blockage.

“That system only works well when you know that project proponents can be trusted.”

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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