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Australia: still officially the safest place for mining investment in the world

Despite the apocalyptic rhetoric from the mining industry and the opposition, Australia continues to be ranked as the world’s safest place for mining investment. Bernard Keane and Glenn Dyer report.

Australia remains the world’s safest place for mining investment, an independent US analyst has declared, again undermining constant claims from the mining sector and the Coalition that the government has destroyed the industry’s competitiveness.

Long-standing US mining analyst firm Behre Dolbear last week issued its 2013 ranking of countries for mining investment. As for the last three years, Australia was ranked the safest destination for mining investment in the world, ahead of Canada and Chile.

The period covered by the assessment includes the commencement of the MRRT and carbon pricing schemes.

The assessment, which strangely hasn’t been reported in any Australian media outlet, including specialist mining publications, stands in dire contrast to claims from the industry that the federal government had made the sector uncompetitive. In September last year, the Minerals Council of Australia released a report claiming ”we have lost our competitive edge” and that there were “increasing perceptions of investment risk”. The Australian Mines and Metals Association claimed in March that the Coalition was the “last hope” for the industry and that Australia was no longer a “competitive destination for investment and job creation”. One mining executive claimed last year that “Australia is being priced out of the market for future investment opportunities”. And as late as November, the Coalition was claiming the MRRT would “deter investment”.

And then there’s high-priced experts like former BHP Billiton chairman, Don Argus, his successor Jac Nasser, the former CEO of Rio Tinto, Tom Albanese (he of the coal project in Mozambique which cost his now-former company billions), and the supporting cast from the Business Council and in the national dailies who claim Australia is pricing itself out of the market because of rapidly rising costs, that the Fair Work Act is killing productivity (while labour productivity has been steadily increasing) and that there’s too much regulation.

So, what was Behre Dolbear’s conclusion about all this? Australia’s rating fell 0.7 points, to 56.3, still well ahead of Canada, on 54.3. The Canadians have closed the gap on Australia courtesy of an improvement on “social issues”, where Australia is already top-rated, because “in Canada, the issue surrounding indigenous people is becoming much less contentious”. And despite constant complaints about “red tape” and “green tape” for mining projects from the industry, Australia is top-ranked on permit delays — way ahead of the supposedly free-market, anti-government nirvana of the United States! Australia also maintained its ranking on taxation régimes, despite the apparently apocalyptic introduction of the MRRT and carbon price. Australia is also top-ranked, along with Canada, on “economic system”, and equal second (along with the US) to Canada and Chile on “political system”.

What about the countries Tony Abbott claims are safer to invest in than Australia? “Now it is safer to invest in Argentina, in Tanzania, in Zambia, in Ghana and in Botswana than it is to invest in Australia,” Tony Abbott said in 2010. Argentina fell to 29 points, not much more than half Australia’s score, and was 15th. Tanzania fell marginally to 31.9 points. Zambia increased marginally to 26.1 points and 19th place. Ghana was steady on 36 points and 10th. And Botswana was eight, on 36.8 points, just under 20 points below Australia.

Probably best to add mining investment to retirement savings as an area one shouldn’t take advice on from Tony “shades of Cyprus” Abbott. Unless he was deliberately trying to talk down Australia’s country’s attractiveness as a destination for mining, like he and his front bench have been eager to talk down the rest of the economy.

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  • 1
    Steve777
    Posted Monday, 8 April 2013 at 1:25 pm | Permalink

    Those with the money to invest knew that all of the talk of the coming MRRT / Carbon Price / Fair Work apocalypse was just to scare the punters into voting the way the miners and their political allies wanted. They knew all along it was all rubbish.

  • 2
    Achmed
    Posted Monday, 8 April 2013 at 1:28 pm | Permalink

    Abbotts comment comparing what Aust Govt did with changing superannuation to what Cyprus did to peoples savings in the bank shows what an economic moron he really is.

  • 3
    Scott
    Posted Monday, 8 April 2013 at 1:33 pm | Permalink

    Well, we were at 59/70 (still ranked 1st) in 2007. We got as high as 61/70 in 2010. But since then it has been all down hill to our current level of 56.3/70.
    We are not improving….

  • 4
    Achmed
    Posted Monday, 8 April 2013 at 1:47 pm | Permalink

    but we are still the best and thats what matters - isn’t it?

    Or do we follow Abbotts others rants that Aust is a terrible country to invest in?

    People seem to forget that when Abbott makde a speech in London he stated that the Aust economy was the eny of the world. His rhetoric for domestic consumption is different because he knows he can lead so many by the nose with his one line “Labor bad - Liberal good” without any policy or economic plan to support that Liberal is better

  • 5
    mikehilliard
    Posted Monday, 8 April 2013 at 1:50 pm | Permalink

    Thanks Bernard & Glenn for bringing this to our attention. The assessment is short and comprehensible so even Abbott should understand it. The list of criteria is interesting, just about everything the Coalition have been critical of Labor for mishandling. Gary Gray should table it at the first sitting.

  • 6
    Mark Duffett
    Posted Monday, 8 April 2013 at 2:00 pm | Permalink

    Behre Dolbear’s rankings mostly “reflect the collective responses to our annual internal survey”. Behre Dolbear’s total professional staff complement numbers around 150.

    On the other hand, the much more widely recognised (both within the sector and more broadly) Fraser Institute mining investment destination rankings were based on 742 survey responses from mining industry participants (i.e. bosses of mining companies) in 2012-13.

    The reader may judge which ranking is most likely to accurately indicate mining investor sentiment - yet the only mention of the Fraser Institute by Crikey in the last 5 years has been to slag it off (scroll down).

    For the record, the highest-ranked Australian jurisdiction (Australian and Canadian states/territories are considered individually) in the Fraser Institute results is WA at 15th.

  • 7
    michael in melbourne
    Posted Monday, 8 April 2013 at 2:40 pm | Permalink

    @ Mark Duffett. Thanks for offering the alternative view. Would you flesh it out a little? How many jurisdictions/countries does the Fraser Institute rank? What has been the performance of the Australian jurisdictions over the last few years - trending up, down, no change etc? What is the time period covered for WA result you mention?

  • 8
    Achmed
    Posted Monday, 8 April 2013 at 2:56 pm | Permalink

    More investment in Africa, more foreign wokers can get a real Africa experience. Become invovled in the local culture - Meet local guerilla groups and bandits, get kidnapped, ransomed and if lucky survive the experience

  • 9
    bushby jane
    Posted Monday, 8 April 2013 at 2:59 pm | Permalink

    Did anyone hear Julie Bishop speaking from China on abc radio the other day? According to her, the Chinese are very concerned about our mining and carbon taxes…Really?

  • 10
    Honest Johnny
    Posted Monday, 8 April 2013 at 3:15 pm | Permalink

    Thanks for this article. For all the doubters, I remember the same announcement from Behre Dolbear last year, and it seems Australia continues to be the safest place in the world for mining investment. Why doesn’t the MSM report this? Why don’t they anylise and report that what Tony Abbott is saying is just hyberbolic crap? I just saw the latest mining industry add on tele, the one with the rugged looking truck driver complaining about the government being “greedy” and mucking it up for mining companies. Then I realised, - advertising revenue!

  • 11
    CHRISTOPHER DUNNE
    Posted Monday, 8 April 2013 at 4:19 pm | Permalink

    I keenly await to hear from the voters’ of Rooty Hill and their assessment of the government given this information.

    What? Rupert won’t tell them? Surely not.

  • 12
    Will
    Posted Monday, 8 April 2013 at 4:28 pm | Permalink

    @Mark Duffett

    I confess I haven’t read the Fraser Institute survey, but I am sceptical of the idea we should assign much weight to a survey of mining bosses in the absence of controls and objective analysis. First, personal surveys are open to all the usual cognitive biases which sustain all manner of distortion policies once enacted. For example, anchoring biases and endowment effects protect many a bad transfer and subsidies. Accordingly, a year-on-year survey is precisely the wrong tool to reassess structural issues, like royalty regimes, because it is totally captive to such cognition problems.

    Moreover, surveys are blunt tools liable to parrot the opinions of business elites. When you run them unmediated by genuine consideration of objective economic and legal conditions, you get few of the benefits of expert opinion (which is highly desirable) and most of the problems of political bias which is already well-provided by our mainstream media. See also CEO surveys about the US economy, where nebulous and circular nonsense about Obama’s impact on certainty features prominently, as well as precious hurt feelings about his non-supine attitude toward Wall St titans. Of course, government ought to provide a good objective environment for business, but that shouldn’t be conflated with CEO feelings - surveys, unfortunately, conflate the two.

    As a well-known industry survey, it should also be pointed out that such a survey tool is highly vulnerable to strategic responses. That is, respondents can readily game their responses to achieve political purposes. While a CEO may know full well that the business environment is robust, they have a huge incentive to respond otherwise if it will achieve visible ink against an unsympathetic government or a particularly disliked policy.

  • 13
    mikehilliard
    Posted Monday, 8 April 2013 at 4:46 pm | Permalink

    From Fraser Institute 2012/2013-

    The average PPI for Australia declined in 2012/2013, although there has been an improving trend over the last five years.”

    Hardly the total destruction of the mining sector the Coalition predicted.

    Also they have NSW rated 8 places below Mauritania & Tasmania 13! I note the government advises “you to reconsider your need to travel to Mauritania at this time due to the high threat of terrorist attack including kidnapping…” Wow, I think I’d rather go mining in Tassy thanks.

  • 14
    Dogs breakfast
    Posted Monday, 8 April 2013 at 5:45 pm | Permalink

    And I so enjoyed watching those mining ads last night. Apparently the government was being greedy, and here I was thinking that it was the mining community that virtually define the word GREED. So glad that I have been re-edumacated by those ads.

    And boy, our mining jobs are apparently in danger of going offshore. Won’t they need long shovels to dig our minerals out of the ground from over there?

    What’s that, oh, not our jobs going offshore, and not our minerals either? You mean to tell me that if we don’t dig them all out of the ground immediately so taht we can sell them into a market that we already flooded, then they will still be in the ground for our kids to dig up?

    Now I don’t know who is being so greedy, and that must be the gummint’s fault.

  • 15
    Mark Duffett
    Posted Monday, 8 April 2013 at 5:49 pm | Permalink

    Michael, the survey report is apparently paywalled at fraserinstitute.org, but a full version seems to be available via google.

    96 jurisdictions were evaluated, including sub-national jurisdictions in Canada, Australia, the United States, and Argentina. The survey is annual, these latest results having been released at the end of February this year. Quoting from the regional summary,

    The average PPI (Policy Potential Index, ‘a comprehensive assessment of the attractiveness of mining policies’) for Australia declined in 2012/2013, although there has been an improving trend over the last five years. Western Australia remains the country’s top-ranked jurisdiction (15th). Victoria had the greatest improvement in the country’s PPI and ranking while Tasmania dropped most significantly.

  • 16
    Achmed
    Posted Monday, 8 April 2013 at 6:08 pm | Permalink

    The price of the ore has dropped 14% due to over-supply. The miners continue to invest to increase production and this will force the price even lower.

    It isn’t the MRRT or carbon tax that are ruining the miners profits, its their own insatiable greed for more more more without any concern to the future.

    They have Labor as a whipping boy and a Liberal mouthpiece to spread their lies and misinformation

  • 17
    Person Ordinary
    Posted Monday, 8 April 2013 at 8:41 pm | Permalink

    @Dogs breakfast - Be careful, if you keep watching ads you will end up with the same perspective of those you mock. If you can’t avoid commercial media altogether, at least hit the mute button so you can deconstruct the ads, rather than the other way around.

  • 18
    Sharkie
    Posted Monday, 8 April 2013 at 8:52 pm | Permalink

    What? Rupert won’t tell them? Surely not.”
    Be fair MrDunne, Rupert’s papers are full at the moment. With the limited news’ journos faithfully reporting the Liberal’s $90 billion NBN beat up, there is simply no room for stories about Australia being a great place to mine.

  • 19
    Hamis Hill
    Posted Monday, 8 April 2013 at 9:21 pm | Permalink

    Now you are being terribly hard on poor Tony.
    He is going to have the very devil of a job cleaning up that woman’s mess, without people like you making it all so much more difficult, by pointing out his very human imperfections just to put him off his game.
    The polls tell us that he is going to be doing very, very important work for Australia and a little more respect for your leader would not go astray.
    After all we are all going to be very dependent on dear Tony, so lay off, you bounders!

  • 20
    GeeWizz
    Posted Monday, 8 April 2013 at 10:32 pm | Permalink

    Steve777… did they know the Labor Party would roll Kevin Rudd and install Julia Gillard and her weak mining tax or was that just a Labor stuffup?

    The High Court has reserved it’s ruling on the mining tax… we may find out shortly in the next few weeks whether Labors mining tax is in fact il1egal and that means Swans $120 Million raised will actually be $0 dollars.

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