PRIME MINISTER
MINERALS AND THE FUTURE
SPEECH BY THE PRIME MINISTER
THE HON. E. G. WHITLAM, M. P.,
TO THE ANNUAL DINNER OF THE AUSTRALIAN MINING INDUSTRY COUNCIL
LAKESIDE HOTEL, CANBERRA, MONDAY 19 MARCH 1973
In the management of our mineral resources,
the mining industry and the national Government have a common
interest and a common responsibility. We are custodians of
much of the nation's natural wealth. We are custodians
of our country's soil and its physical riches. We have a
joint interest in ensuring that these resources are managed
in the interests of the whole nation, both for present and
future generations. Last December the Australian people
gave my Government a positive mandate to discharge this
responsibility in partnership with the mining industry and
its many associated enterprises. It is a duty we will not
shirk. No one can dispute the fact that in a
short time your industry has helped transform the face
of our nation. It has transformed our landscape; it has
transformed our balance of payments. It has brought
Australia immense benefits, immense wealth, immense
technological and industrial progress. While our gross
national product and the total value of our exports doubled
during the 19601s, the value of our mineral exports increased
eight-fold. Minerals accounted for 7% of the value of
our exports in the early sixties; they now account for
more than 20%. We have thus restored the position of the
gold rush days of 100 years ago, when gold and minerals,
accounting for 47 per cent of Australia's exports,
were our principal export commodity. For all practical
purposes Australia is now self-sufficient in major
minerals except crude oil and the prospects there
look increasingly bright. This story is one of the great
feats of modern exploration. It is due in large measure to
the vision and enterprise of the men in this room tonight. / 2
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But there are wider considerations that compel
the involvement of modern government in the mining industry.
Despite the size of our mineral reserves, it would be fallacious
and dangerous to regard them as inexhaustible. There are
limits, as other countries have already found. The notion
of unrestricted mining and exploitation is one we cannot accept.
We must be concerned at the effects of unbridled competition
on the stability of international trade. We must recognise
a growing concern in major industrialised countries at the
rapid depletion of traditional energy sources and their
increasing dependence on imports for their raw materials.
We must be concerned to see that our minerals are sold at
reasonable prices in world markets. We must be concerned
to see that our future energy needs and industrial
requirements are met. We must take account of the effect
of mining on the rights of our Aboriginal people, on the
environment and the control of pollution, problems
of undoubted significance for all mankind. We must ensure
the greatest possible measure of Australian ownership
and participation in the mining industry. The industry
is already 62% foreign owned. We do not want that figure
to go higher. In short, for all these reasons, we cannot
allow the future to take care of itself.
EXPORTS Accordingly, my Government is implementing
new policies. Our first step, as you know, has been to place
controls on all mineral exports, whether in raw or semi-processed
form. This, we believe, will ensure that exports are sold at
reasonable prices on the world market. Our measures will
encourage more processing of minerals in Australia, leading
to greater employment opportunities, greater industrial
self-sufficiency, and, not least, to a higher unit value
for our exports themselves. In the longer term, through
these controls, we can look to shipping economies for both
buyer and seller, by reducing the volume of low-value
materials being moved around the world. None of this
means that the Australian Government wishes to cut off
supplies of raw materials to valued business partners in
other countries. We shall do business, and we shall do it
with honour; but we do not regard the rape of our resources
as inevitable, and we certainly do not intend to lie back and
enjoy it. The basic objective of our new measures is to
obtain the best return for Australia consistent with the realities
of the market place and balanced mineral development. It would
be foolish in administering the controls to ignore the market
realities of an industry which has provided the main dynamic in
our balance of payments. But judicious use of the export
control powers will add to our foreign exchange earnings.
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My colleague, the Minister for minerals and
Energy, has already said that the Government's export control
powers will not be employed capriciously or vexatiously.
This is a unanimous attitude among members of the Cabinet.
We want to assure our trading partners that we are seeking
no more than a fair price in our mineral contracts with
them. It would be unreal to seek prices higher than the
market will bear when alternative sources of supply are usually
available. As the details of our policies are worked out in
the months ahead, we shall take every opportunity to explain
them in bilateral consultations and in international organisations
concerned with minerals trade. Indeed, I see great scope for
consultation between Governments on the problems of mineral
development and trade. We are particularly conscious of the problems
of Japan, our major market for minerals. Her vast industries
are especially dependent on imports for their energy needs and
raw materials. It is not, and I must insist on this, our
purpose to try to exploit that dependence. But we believe it
would be in the interests of both Japan and ourselves to work
together more closely to secure for Japan a more reliable
source of supply and to secure for Australian exporters more
reasonable prices. Ne~ ither of these aims is likely to be fully
achieved if trading arrangements are left almost entirely to private
commercial negotiation. Both will be achieved if our mutual'
interests our interdependence as trading partners are fully
recognised at both government and commercial levels.
The steps we have already taken will ensure that
the Government is kept fully aware of marketing arrangements covering
export prices and supply commitments. This is a prime purpose
of our export controls. We need to be satisfied that our mineral
export policies and practices are in the best interests of
Australia and our trading partners. It is perfectly clear that
large companies with interests crossing many national boundaries
may conduct their business in a way which, while maximising
returns for themselves, will be to the detriment of a particular
country. We will satisfy ourselves that those companies operate
in Australia in our interests as well as their own.
REVALUAT ION I know of your special concern with the effect
of recent currency fluctuations on your export contracts.
On this point I hope to reassure you. The effect of the
fluctuations, of course, is by no means uniform. Some currencies
have been appreciated, others depreciated, others remain at
their previous parities. As you know, companies with contracts
written in U. S. dollars, which include most iron ore contracts,
have suffered a reduction in their Australian dollar incomes. ./ 4
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But several factors tend to offset this loss. In many cases,
the immediate adverse effects on mining companies have been
avoided by taking out forward exchange cover. In addition,
the interest on and repayment of U. S. dollar borrowings
will cost less in Australian dollars. There should also be
increased shipments of minerals. For example, iron ore
exports from the Pilbara to Japan for 1973-74 are expected
to be substantially higher than in the current year. Other
mineral exporters are enjoying increases in the world prices
of their products, such as copper, zinc and lead. The
mining industry can expect its sales to increase as the
economies of customer countries expand.
The Minister for Minerals and Energy has said
that he expects appropriate relief to be given to exporters
through the re-negotiation of contracts written in American
dollars. In this he has the full support of the Government.
Needless to say, he has your support. For our part we will
be using our influence to see that suitable relief is
forthcoming. On 15 February Mr. Connor discussed this problem
with the Japanese Ambassador in Canberra. Mr. Connor pointed to
the need for early discussions between Japanese and Australian
businessmen. In a letter to Mr. Connor of 20 February, you,
Mr. Phillips, indicated that your council welcomed the
Government; s intervention to assist in renegotiation of contracts.
We shall use all our influence to see that suitable relief is
forthcoming. But I emphasise that any new negotiations would have*
little prospect of success if the Government were to indicate in
any way that it was considering compensation for mining companies
for the effect of recent currency changes.
For the future, it is certainly desirable that
contracts should be written in Australian dollars or provide
for stability ofreturns in terms of Australian dollars.
With long term contracts, built-in safeguards will be needed
to cope with currency changes and variations in demand. That
should be the aim. Mining companies must keep it in mind.
It is regrettable that this simple precaution was not observed
with many contracts already written, tome which still have
many years to run. It is also fair to remind you that some of
your industry's financial problems stem from individual negotiations
a few years ago with group buyers. I hope our new control
mechanism will work to prevent individual suppliers being picked off,
one by one, by overseas cartels.
While we want fair prices for our minerals, we
recognise that fixing appropriate export prices will need to be
handled with care. In some cases there is no single, readily
ascertainable price which can be regarded as a world price.
Quality differences and locations need to be considered. There
will also be times when it will be in the producer ' s and the
nation's interest to permit sales at low prices, perhaps as low
as the cost of production provided the nation and the producer
can earn a satisfactory profit at the lower price. This may be
necessary when we are trying to break into new markets. We know
that in many instances mining companies operate in a buyer's
market, and too rigid an application of controls could result in
contracts being lost to other countries.
PROCESSING I have said that my Government wants more
processing of our minerals. It is the policy of my party
and my Government " to encourage the treatment and fabrication
of mineral resources in Australia." At every stage of
processing, the value of these resources is greatly increased.
Your council has indicated that it supports more local
processing, but that companies should not have to undertake
further processing if it would be uneconomic to do so.
This is a reasonable approach. Local processing places
a heavy demand on capital and other resources. Before
requiring a company to process in Australia, we will ensure
that markets are available for the processed product. The
State Governments, through the control they exercise over
mining and exploration leases, generally require mining
companies to undertake feasibility studies to determine
whether processing is economic. My Government supports
that requirement.
ABORIGINES High among my Government's ambitions is to
give natural rights to our Aboriginal people. We are determined
that their interests will be preserved in any mining operations.
Until the mid-1950s no mining in Aboriginal reserves in the
Northern Territory was permitted. Then it was decided to allow
prospecting and mining in the reserves, but to pay royalties
on minerals to an Aboriginal Benefits Trust Fund. The decision
to pay royalties into a fund for Aboriginal use was a somewhat
oblique acknowledgement of Aboriginal rights in the land.
The Crown, however, continued to collect royalties in the
first instance and to control prospecting and mining.
There are now two major mining operations in
the Arnhem Land reserve and another, of course, in what was once
part of the Aboriginal reserves on Cape York in Queensland.
All three developments are close to Aboriginal communities.
It would be difficult to draw up any social balance sheet of
gains and losses of these Aboriginal communities. The indications
are that none of the communities would wish to turn the clock back.
It is certain, however, that they face critical problems in
adjusting to the new situations, and that the benefits to the
Aboriginals in terms of employment and training, which had been
hoped for at the outset in the mid-50s, have not always been achieved.
The Government has announced its intention to
grant to the Aborigines title in the land in the Northern Territory
reserves. Mr. Justice E. A. Woodward's commission is to advise on
ways of implementing this policy. To avoid further complication of
an already complex situation, the Government imposed a " freeze"
on the issue of exploration licences and mining leases and of
leases of land. This action, we know will create problems for the
companies concerned. The Mining Industry Council has urged that
the rights of those companies committed to exploration programs in
the reserves should be renewed. These cases are being examined, as
are the needs of operating companies, which need additional mining
and land leases. Your council has also argued against any
abdication of Government responsibility for, and control over,
mineral resources. Decisions on this aspect of the land rights
issue will be taken only after the Government has had an
opportunity to consider the report of Mr. Justice Woodward's
Commission. The Commission hopes to report within a few
months. The Mining Industry Council's submission will be
carefully considered.
ENVIRONMENT We must be equally concerned with the effect
of mining on the total environment. Last month the Australian
Government endorsed a policy of impact statement procedures
to ensure that the environmental effects of any proposal are
taken into account at all stages of decision making. Impact
statements will be required where a proposal has significant
environmental consequences, where Commonwealth funds are
involved, or where Commonwealth constitutional power is
involved. From January 1974 there will be public hearings
before an impact statement is prepared.
At this point, allow me to quote the words
of H. R. H. The Duke of Edinburgh, who is now visiting Australia
as chairman of the Australian Conservation Foundation.
Writing on 18 September 1972 he said:
" It might well be supposed that the
conservation of nature and natural resources
is something quite new in man's experience whereas,
in fact, every civilisation in history which did not
take active steps to control its growth had to suffer
the exhaustion of raw materials or food, or both,
and collapsed. The only difference today is that
our civilisation has come to rely on a different
set of the earth's resources which, until the
development of industrial processes, had remained
untapped. Technology has raised human standards
of existence to heights beyond the imagination of
previous civilisations, but it has also made it possible
for astronomical numbers of people to inhabit the earth.
" The problem is two-fold. Unchecked exponential
growth in population numbers, coupled with exponential
growth in the use of non-renewable mineral resources,
is an extremely serious threat to the standards
and very existence of our present civilisation.
The threat is most serious to those enjoying
the highest standards.
" At the same time, the proliferation of the
human population, the exploitation of natural resources
and the constant increase in the demand for more
food-growing land constitute an even more deadly threat
to the continued existence of the natural and wild
environment as we know it today." / 17
These are among the reasons for my
Government's involvement in the mining industry.
The same concern is shared by Governments throughout
the world. It is not our intention to bring to an end
the truly magnificent achievements of the past decade
or so. Rather it is our firm intention to help your
industry, not hamper it; to encourage trade,
not frustrate it. But we must look to the broadest
long-term interests of our country. Your industry,
I know, will benefit from my Government's
participation. The one thing you can be sure of is that
the free-wheeling approach of the previous Government
is gone forever. We have much to share and much to gain
in our trade with the rest of the world. But it must
be clear that, in regard to minerals, Australia
henceforth intends to be the mistress of her own
household. CANBERRA 19 MARCH 1973