By Stephen Mayne, patriotic Aussie capitalist
The front page lead in The Financial Times on Friday
detailed moves by Russia to renegotiate the terms with foreign
investors including Exxon-Mobil and Shell at the giant Sakhalin oil and
gas projects. Nationalisation has been a feature of the Putin regime
and we’ve also seen Bolivia recently move to nationalise its energy
assets and South Korea extract huge donations from exiting foreign
investors who snapped up trophy assets during its 1997 financial
Elsewhere in The FT on Friday, a feature on Indonesia included the following line:
The Indonesian government is not alone in complicating life
for mining companies as developing countries from Latin America to
Mongolia increasingly seek a greater share of their mineral resources.
It’s an interesting question for Australian politicians given that we
have the highest proportion of foreign ownership of our assets of any
developed country in the world after New Zealand. Today Tonight and 60 Minutes have been cranking up the coverage about guest workers and immigration, but what about foreign capital?
Truth be known, the huge profits being shipping offshore by foreign
energy and mining companies is now close to the biggest single
contributor to our appalling current account deficit.
Without wishing to be xenophobic, the WA government’s sweetheart deal
with London-based Rio Tinto over the Shoveleena iron ore deposit
and recent cuts in royalty payments for the mining giant goes strongly
against the global trend to push for a greater local share of the
This is why we are putting together the first comprehensive lift
detailing ownership and royalty arrangements for every Australian
resource project worth more than $1 billion. Today’s five new entries
are as follows:
Yandicoogina: Rio Tinto’s biggest Australian iron ore mine in
the Pilbara has a designed production capacity of 20 million tonnes per
annum of fines, but is undergoing an expansion to 36 million tonnes. At
the 2005 price of about $58 a tonne, this produces revenue of almost
$1.2 billion for London-based Rio which is about 30% owned by
Australian investors. The 3.75% annual royalty payment generates about
$45 million a year for WA taxpayers.
Rio Tinto Pilbara iron ore: 3.75% royalty
on existing projects and three proposed new developments – Brockman
Four, Mesa A and Middle Robe – after which it will rise to 5.65% on any
Argyle Diamond Mine:
world’s biggest diamond mine, owned by Rio Tinto which is London-based but 30% Australian owned. Royalty cut from 7.5%
to 5% from January 2006 in exchange for $1 billion under ground
Mt Isa Mines: one of the few places in the world where
the four minerals – copper, zinc, lead and silver – are found and mined
in close proximity. Owned by Swiss-based and London-listed Xstrata
since the MIM takeover in 2001, Mt Isa is now a bonanza with annual
production capacity of 5.1 million tonnes of zinc/lead and 6.2 million
tonnes of copper which produces revenue of almost $1 billion a year. Queensland royalty take is about $40 million a year.
Cooper Basin: $1 billion in revenue for Santos.
Yandi: Australia’s biggest iron ore mine is owned as follows:
BHP Billiton 85%, Itochu Minerals 8%, Mitsui Iron 7%. 2005 production
of 35.66 million tonnes was worth $2 billion and this will rise again
with the latest 19% increase in contract prices so the mine is clearly
worth several billion dollars and it is 34% Australian owned. WA
taxpayers pocket a 3.75% royalty worth about $75 million a year.
Mt Newman: Australia’s second biggest iron ore project is 85%
owned by BHP Billiton, 10% by Mitsui-Itochu Iron and 5% by Itochu
Minerals. 2005 production of 25.74 million tonnes were worth $1.5
billion, so the mine is worth at least $3 billion and Australian
ownership is 34%. WA taxpayers pocket a 3.75% royalty worth about $56
million a year.
Portman, which is 80 per cent owned by US-based Cleveland Cliffs, sells the
majority of its iron ore from its two West Australian operations to China under
contracts set to the benchmark price.