The media and the opposition would have you believe the fifth horseman of the Apocalypse, looking very much like Kevin Rudd riding on his RSPT, had gone into Mt Isa and wreaked havoc, in the wake of Xstrata’s decision to suspend its Wandoan coal project and an extension to its Ernest Henry copper mine.
It’s garbage, and the cleverly tax-avoiding Switzerland-based empire has played this game before.
Let’s look at the facts of what they’re claiming to do — facts you won’t get from the mainstream media today.
The “$6 billion” Wandoan coal project — it’s still in the planning stage and hasn’t even received the requisite environmental approvals yet — isn’t intended to produce coal for export. As Xstrata itself admits in its spruiking of the project, massive road, rail and port infrastructure upgrades are required if the coal could ever be exported. Instead, the project was dependent on the Wandoan Power project — a Carbon Capture and Storage initiative that is entirely reliant on federal government funding. The government is investing billions in trying to make the so-far commercially-unproven CCS technology viable, but it’s not even yet clear if the Wandoan project will attract funding from the government, and won’t be for quite some time.
And as always when it comes to the mining industry, look at what they do, not what they say. Remember that huge $4.85 billion bid by the coal industry for QR’s coal lines last week? That’s the one where the bidders specifically said they were prepared to pay a premium — using borrowed money — for the infrastructure because they were so confident of ‘future growth’ in coal exports.
Who’s leading that bid? Who has such confidence in growth in coal exports that they’re prepared, even in the light of the RSPT, to pay over the odds for infrastructure? BHP and Xstrata.
Again, look at what these people do and not what they say, because when they open their mouths they lie.
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When it comes to the Ernest Henry copper mine, even Xstrata itself is confused. It says it’s not proceeding with one extension, but it is with another. Ernest Henry will still be going for another decade, according to the company. The real reason why it isn’t proceeding with its more expensive expansion of the mine at this point is simple: the copper price has tanked and doesn’t look likely to recover any time soon, not while there are concerns about sovereign debt and banks in Europe and the Chinese government is trying to rein in growth.
Nothing to do with the RSPT. How do we know? Well, Xstrata shut down a major copper operation in Canada back at the start of the year. Since then, the price of copper has fallen further.
This isn’t the first time that Xstrata has made these sorts of claims, though.
In March last year, at the height of the CPRS debate, Xstrata confidentially told Malcolm Turnbull they wouldn’t proceed with the Wandoan project if the CPRS went ahead. Turnbull, eager to score points off the Government, used the claim in question time, saying it was evidence the CPRS would cost thousands of jobs.
An embarrassed Xstrata then had to back down from the claims, admitting the project wouldn’t be substantially affected by the CPRS.
In the ‘perpetual present’ of political coverage, of course, that’s long been forgotten by journalists.
As one former coal industry insider told Crikey: “this is a total con”. Threatening to halt or delay projects was, they said, a common industry tactic, and was frequently used during the campaign against the CPRS. “This was all just tactical bullying and everyone in the industry knew that at the time.”
And in the mainstream media and lazy journalists, they have a willing ally.