PERTH CHAMBER OF COMMERCE
THE CONFEDERATION OF WESTERN AUSTRALIAN INDUSTRY
Luncheon March, 1976
Address by the Acting Prime Minister
and Leader of the National Country Party
RT. HON. J. D. ANTHONY
If you cast your mind back to 1972 you will rnembe2
that it was a year when Australia's mineral industry had
just completed a decade or more of the most spectacular
development in our history. It seemed poised for a further
surge of the same sort of development.
The Weipa and Gove bauxite projects, the Bass Strait
oil and natural gas fields, the Bowen Basic black coal
projects, and many other projects had come into production
or were comnitted. Here in Western Australia, the great
iron ore projects, the Kambalda and Scotia nickel mines,
the Jarrahdale and Del Park bauxite projects, the Kwinana
nickel refinery, and the Kwinana and Pinjarra alumina
refineries had been established.
These were the projects of the preceding decade.
Ahead of you was the prospect of the enormous potential
arising out of the gas discoveries on the North West Shelf.
It has been said before, but it bears repeating, that
in this State you have what is probably one of the most
remarkable combinations of mineral resources the world has
ever seen: natural gas, iron ore, nickel, uranium and
bauxite in great abundance, and a host of other minerals
in varying amounts copper, zinc, manganese, vanadium,
mineral sands and salt. In Queensland major deposits
of high grade coking coal and in the Northern Territory
major deposits or uranium also offered prospects for major
new developments. At the time the feeling had grown in the community
that nothing could hold back the realisation of that great
potential. But something, or someone, arrived on the
scene with a stultifying influence on development plans.
A different political philosophy and a different economic
approach were brought to bear. Important decisions were
deferred. This was then compounded by the worst slump in
the world economy since the Second World War and the greatetL
inflation that Australia has ever experienced.
The net result was that in the period after 1972, -he
momentum of the development and exploration of the previous
decade began to falter. The prospect of further spectacula'
developments began to look less promising. The development;
that did take place was on projects that were already ii, t:
pipeline. The Liberal-National Country Party Government feels
strongly that Australia cannot afford to allow that momentu,:
to be lost. To a large extent our standard of living
depends upon it. If we are to improve our standard of livi.. . g
we will have to increase our imports, and the simple fact i.-
that we can only do that on a permanent basis if we also
increase our exports. / 2
The mineral industry provides us with the most likely
prospect for substantially incrcasing our export inco'-, e
in future and generating growth in our domestic economiy.
We must also look at our crude oil production. Althouglh
this is not exported, it has the same effect on our balance
of payments. Last year it enabled us to avoid import
spending in the vicinity of $ 1500 million. We must find
and develop new deposits, or other sources of energy that
we can substitute for oil, or face the prospect of a growiL,-
dependence on overseas oil and a massive growth in our
import bill.
If we want a graphic illustration of just how import4Ianimour
oil and minerals are in this regard, we have only to
look at the way we were bailed out of trouble by our mineral
export income during the 1970/ 71 wool slump, and how we weri'
cushioned from the worst effects of the energy crisis by
the availability of a domestic supply of crude oil.
Because our balance of payments at this stage is healthy
we should not be complacent. If we are to secure our future
we must look ahead. A rough rule of thumb is that it takes
years from the commencement of exploration before a project
comes on stream and five years from the date of the discovery.
In our exploration we should therefore be thinking 10 years
ahead, and in the development of known deposits five years
ahead. The contribution that minerals make to our balance of
payments is, of course, not the only benefit to be derived
from such developments. You are all well aware of the great
benefits for regions, for states and for the nation that
they bring.
Nor is it only our own welfare that is at stake.
The customers for our minerals are also affected by what
we decide to do in our minerals industries. As a nation
rich in resources, we have a real responsibility to nations
which lack them and need them. Japan in particular is
vitally affected. The Australian and Japanese economies h'E
over the space of 20 years developed a marked complemerit--ari>.
Overall Japan takes about 50% by value of mineral exports,
and in the case of coal and iron ore about 75% and 78%
respectively. Clearly what concerns one of us concerns ano
affects the other.
All this means that we must proceed with the develc~ pme:--
of our mineral resources. Certainly I place great importan-, c
on restoring the minerals industry to its proper role in
Australia's economic development. / 3
This does not mean, however, that the Government: will1
be uncritical in its examination of new projects. Amiongst
other things, -the Government will want to be satisfied that
the rights and needs of the Aboriiinal people are safeguarded.
There will need to be adequate protection of the enviroriipentL.
Before major projects are undertaken we will want to be as
sure as we can be that a market exists for major additions
to output, at reasonable prices. Projects that merely
displace existing Australian producers, or that force down
prices in a scramble for sales, will transfer the benefits
of our resources to our foreign consumers and bring little
if any benefit to ourselves.
Further and this is a point I felt it necessary to
emphasise, when I was in Japan a few weeks ago'-the
Government will want to ensure that arrangements entered
into between Australian exporters and overseas buyers do not
prejudice Australia's interests. We will retain the existing
export control arrangements and, if necessary, use them.
The Government also will want to be satisfied that
development proposals meet its foreig n investment policy
guidelines. We recognise that foreign investment can bring
advantages that might not otherwise be available. And we
should continue to welcome foreign investment that is
mutually advantageous to Australia and the foreign investor.
But at the same time we must not lose sight of the legitimate
aspirations of the Australian people towards Australian
ownership of our natural resources.
Subject to being satisfied on these points, the Government:
wishes to see new projects proceed, and is taking urgent
steps to ensure that they do so.
One of the first of these steps was my visit to Japan.
It was of the utmost importance that we clear away any
doubts that Japan had about Australia's trading policies. I
wanted to restore the former harmony in our relations with
our most important trading partner as early as possible.
As I have stressed again and again, Japan needs an
assured and stable supply of raw materials and energy sources
at reasonable prices. We have the potential to give he-r
the security and stability she needs. But we can only do
so if she in return gives us an assured and stable market
at reasonable prices for our output of these materials.
So on the one hand I sought to restor * e confidence in
Australia as a reliable and willing source of supply; on
the other I sought to be assured that if we expanded our
industry to meet Japan's needs, the Japanese market would
have the growth potential and the certainly to absorb our
additional output. / 14
In Japan I found a very obvious desire to co-oore4--te
with us and I believe that my purposes were achieved to a
very satisfactory degree.
Another step, and one which I consider fundamental to
netting development under way, is to restore consultation
the Commonwealth and State Governments and between
the Commonwealth Government and the mining companies. Quite
clear. ly, the Commonwealth Government, the State Governments
industry each have important roles to play in the
dev.' lopment and operation of the mineral industry. If we
are to restore the industry to its proper role in the nation's
development, it will be most effectively done if
:, ct together to see how we should best go about it.
1. have already taken steps with my State Government
-*.: nte. rparts to revive the Australian Minerals Council
Ind'. i have had very many meetings with industry
rpresentatives in the last two or three months.
All of this, however, in no way runs counter to the
_ act that the Commonwealth Government generally looks to the
4. aivte sector to seek out trading opportunities, to find
resources, to marshall capital, to develop projects and
ng2o tiate and carry out contracts.
Western Australia, with the very great potential of
ineral resources, is affected to a very special degree
the question of getting development going again. I have
the last few days in the northern part of your State.
cl: ays, I have been amazed by the sheer scale of the
n and of what it promises in terms of resource develctl'..:,'..
. it to the area leads me to make some comments on mattr.
articular interest to Western Australia.
P ; otroleum exploration is a classic example of the
I have been discussing. The confidence of the in-t:
been seriously eroded over recent years, largely becau-e
, uncertainty about the role of the Government, and about
'-nq and export policies. Compared with 38 exploration
-drilled offshore in 1972, only 19 wells were drill. ed i,
This decline is also clearly reflected in the numbel.
' 7oration vessels actually working on our coast. Only
-an Digger is now operating, on the North West Shelf.
' r six were operating a few years ago. Two Australiantied
up for lack of work. One of these is th'e
which was completed last year at Freemantle.
a restoration of confidence and as qui'-.'
But it cannot happen overnight. It takes
s of companies to be put into effect..'ΓΈ.
' ation of great economic difficulty.
One significant way of encouraging further exploration
and development is by allowing lim'Ited exports of natural
gas. I took some soundings in Japan about the prospects of
sales from the North West Shelf. Japan's requirements of
LNG will double between now and 1985, but the bulk of their
requirements are already securod. However, they are looking
to Australia to meet some of the balance. I explained to
the Japanese that our Government's policy will be to allow
reasonable quantities of exports of LNG on a commercial basis.
The way is therefore now open for companies concerned to
explore the sales prospects in greater depth.. I hope that
arrangements mutually satisfactory to both countries can be
concluded at an early date.
I must say the way in which Japan is using LNG
is tremendously impressive. They have put this very clean
and efficient energy source to use for domestic and
industrial purposes and for power generation. The LNG
terminal I saw on Tokyo Bay is supplied by seven tankers
which operate continuously between Japan and Brunei. The
terminal supplies five million households as well as
industry, and fuels a power station which is part of the
Tokyo Electric Power Company system supplying thirty three
million people in the Tokyo region.
The major significance of the North West Shelf gas,
especially for Western Australia, is very well appreciated in
Canberra. The Shelf holds about 50% of Australia's known
reserves of gas. The development of the project will be one
of major proportions running into thousands of millions of
dollars including the necessary pipelines and the new end user
industries in Western Australia, including the Pilbara. The
development will thus have a very big impact on the economy
of Western Australia in the years ahead. Unfortunately,
Decause of the attitudes of the previous Commonwealth
Government, much valuable time has been lost with drastic
effects on the development costs the companies will now face.
I have already had discussions with the Woodside-Burmah
representatives, and also with the State Government, on ways
and means of getting the consortium's project off the ground.
The companies have been reviewing their production and marketing
plans and I hope these will be available for consideration by
both Governments at an early date. The Commonwealth Government
will work very closely with the companies and the State
Government to ensure that the necessary decisions can be
expedited. 6
The Commonwealth Government is also working with
the State Government to find other vays of increasing
exploration offshore. Some applications for permits are
currently under consideration. As announced by Mr.
Nensaros in January, plans are in hand to call applicatioriS
for permits over large areas of the North West Shelf
relinquished last year during the renewal. processes.
Australia's present known petroleum reserves are quitc--
inadequate. It is only by a major revival in exploration
that we stand a chance of making the large discoveries so
essential for Australia's future needs.
Turning to iron ore, we find that after a period
of unprecedented expansion in steel output, Japanese
production has fallen well below earlier estimates. Thi1s
has led to a downward revision of forecast steel output
over the next few years. This means Japan needs less raw
material than expected. But there is optimism that the latterhalf
of this year will see the start of a recovery in dcmand
for steel. And it should strengthen next year. In other
important steel markets a similar recovery is forecast. The
International Iron and Steel Institute expects steel
consumption this year to rise by 11% in the and
by 15% in the United States, over last year.
Details given to me of the Japanese steel companies'
forward construction programmes indicate that there will
be opportunities for additional iron ore sales. As it
takes some time to bring new mines into production I expect
that new contracts with Japanese mills will be signed fa2",* Ly
Soon. In Japan I stressed that as Australia is an efficic!-rand
stable supplier and has the advantage of geographical.
proximity, the Japanese should consider the benefits of
increasing the proportion of iron ore requirements taken f:.
Australia. As well as Japan, promising markets are also being
developed for Australian iron ore in Europe, the People~ s
Republic of China, the Republic of Korea and the United
States. I am confident that other new markets will emiergc
in the future, particularly in nearby countries in our r~>
But the iron ore market will continue to be very
competitive. Iron ore is an internationally-traded conmmodiZy,
To maintain our world rating status we must maintain o-ur
competitive position. We cannot take continued growth o
granted. But it will occur if we remain an efficientrlUZ:
and stable supplier. / 17
7.
For my part I will be doing my utmost, in co-operation
with the Western Australian Governrent~ to bring into being
as many of the potential iron ore expansion proposals as
can be reasonably accommodated by assured markets. The
Federal Government also supports the upgrading and
processing of Australia's~ iron ore resources where this
is economically practicable. In time, I expect that natural
gas from the North West Shelf will play a very important
role in such processing.
The immediate development picture in regard to nickel
is a more promising one, with the Agnew Partners having
decided to take the initial steps in that project. In
looking at this project the Government will want to look
also at the prospects of the early development of a smelter
and at the longer-term prospects for a refinery.
Mineral sands is an area where there has been
considerable development in Western Australia recently.
With the open:-ng up of deposits and some expansion, this
State is on the verge of becoming the leading producer
of mineral sands.
Currently the industry has marketing problems, particularly
for ilmenite and zircon, your two main products. It is a
great pity that the large-scale expansion of the industry
in this State has coincided with the economic recession in
Western economies. Big tonnages are available for export
just when the market is weak. I hope that further development.
can be timed to come in when markets are more buoyant.
These four case studies petroleum, iron ore, nickel
and mineral sands indicate that getting development going
again will not always be easy. It will require initiative
by industry and by Government. Above all it will require
co-operation between the Commonwealth Government, the State
Government and the companies concerned. But there can be
no doubt that very great opportunities exist if we have the
wit and will to grasp them. I leave with you the -thought
as I leave it with our overseas trading partners whenever
the opportunity presents itself that Australia under
this Government will be a secure, dependable and predictable
source of the resources that underpin the world economy.
Thank you for your hospitality. It had been my hope
to have visited Western Australia earlier this year, but
circumstances arose which did not allow this to happen. To
my long-suffering and very understanding hosts I say a
special word of thanks. And thank you all for this
opportunity to speak to you.