A mining industry leader in Perth this week highlighted the key issues facing the sector, and by extension WA.
WESTERN Australians may sometimes recoil when a ‘wise man from the east’ comes to town for a lecture, but the visitors often provide some useful insight and considered perspective on the state’s place in the world.
So it was this week when Rio Tinto’s London-based chief executive Tom Albanese passed through Perth – and the company’s extensive Pilbara mining operations – to check on progress.
Addressing an Australian Institute of Company Directors lunch, Mr Albanese cut to the chase on the big issues facing his company.
In so doing, he reminded the audience of the enormous opportunities for WA, and the growth challenges facing the state.
The overall theme of Mr Albanese’s address was positive.
The bottom line, he said, was to be ready for growth.
The drivers of global economic growth, particularly the rise of China and India, would continue to be overarching themes in the coming decade.
Around that, Mr Albanese warned there would be brushfires, with the Greek debt crisis just the latest example.
The winners, he said, would be those that best dealt with these outbreaks.
Mr Albanese said Rio was prepared to continue investing in the rapid expansion of its Australian operations, particularly its Pilbara iron ore mines, so long as local boss Sam Walsh and his team kept delivering results.
The group’s current expansion plan will lift its iron ore capacity in the Pilbara from 220 million tonnes per year to 330mtpa.
Amazingly, Mr Albanese said this growth would not be enough to meet anticipated demand, and would result in the group losing market share if that was all it did.
With that kind of growth, little wonder there is a long and growing list of iron ore miners.
BHP Billiton, Fortescue Metals Group, Hancock Prospecting and Atlas Iron are all readying for growth, while Aquila Resources and many smaller companies are keen to break into the market.
The Mid West is also home to many aspiring iron ore miners, yet as we have witnessed over the past week with the Oakajee project, the mines will proceed only if the port and rail infrastructure can also be developed.
Mr Albanese also spoke about infrastructure, but his focus was on public infrastructure; things like schools and hospitals, as well as transport, water, power and housing.
The lack of this kind of infrastructure in the Pilbara was, he said, one of the major issues facing Rio.
Another was the regulatory environment, which was increasingly driving the company’s timetable.
A third issue was the shortage of people, particularly skilled labour.
These issues are acute in WA, but he said they were not unique to this part of the world. Rio is facing exactly the same issues in other fast-growing mining provinces, such as central Queensland, eastern Canada and Chile.
Mr Albanese also spoke at length about the issue of sustainability, which he said Rio had been committed to for more than a decade.
He reflected a widely held view among leading resources companies that they need to act responsibly if they want to retain their ‘licence to operate’.
In the same week that Christopher Monckton, 3rd Viscount Monckton of Brenchley was in town to speak on climate change, Mr Albanese stated explicitly that he is “not a climate denier”.
He said carbon emissions were having an impact on the environment, and the impact would get more serious, but it would be rash for Australia to “go it alone” in trying to address the issue.
Big emitters the US, China and India needed to act, he said. In the meantime, if countries like Australia want to put a price on carbon emissions, they should adopt a low price, phase it in, review its impact after a couple of years, and keep it simple.
That is sage advice for the federal government and the minor parties in Canberra, which are trying to thrash out a deal on a carbon tax.
He also defended the coal industry, which Greens leader Bob Brown wants to phase out.
Coal accounts for 20 per cent of Australia’s exports, and any cutbacks by Australia would result in extra coal output in other regions.