As we approach the 10th anniversary of the rolling of Kevin Rudd, it is worth remembering that this was also the moment when Australia rolled over to the big iron ore miners, delivering billions of value to the likes of Gina Rinehart, Twiggy Forrest, Clive Palmer, Rio Tinto and BHP.
Rudd’s proposed Resources Super Profits Tax would have profoundly increased Australia’s national wealth but the campaign against it run by New York-based News Corp, UK-born Tony Abbott and the largely foreign-controlled mining industry contributed to Labor’s decision to knife the prime minister.
Julia Gillard then negotiated a compromise arrangement with the miners which produced little revenue and then the Abbott government abolished this new mining tax altogether.
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Fast forward 10 years and the WA state government is lumbered with a state debt exceeding $50 billion, while The AFR’s Rich List values Gina Rinehart at $21.2 billion and Twiggy Forrest at $17.6 billion, all thanks to exploiting WA iron-ore and shipping it to China.
There’s something not quite right about two individuals amassing a $39 billion pile exploiting state-owned iron ore assets from a state government which is struggling in a pandemic and left with with $50 billion-plus in state debt.
Then you have the two real giants of the iron ore industry, Rio Tinto and BHP, which are both majority foreign-owned.
The Morrison government has recently introduced tough, new foreign-ownership laws in Australia, particularly as they relate to Chinese Communist Party connected companies.
One such company with a big Chinese connection is London-based Rio Tinto. Chinese state-owned Chinalco is its largest shareholder, with a 14% stake in Rio Tinto’s UK listed shares currently worth around $18 billion.
China is clearly cranking up its diplomatic war against Australia with the decision to execute Australian national Karm Gilespie after he disappeared into the Chinese criminal justice system seven years ago following an arrest for drug possession.
While this has nothing to do with Rio Tinto, the issues blur when you also consider the world’s rolling Black Lives Matter campaigns and Rio Tinto’s outrageous decision to blow up ancient indigenous heritage in the Pilbara to expand its iron ore operations. The global backlash against Rio over the cave destruction has been substantial, and there’s an obvious solution here.
Rio Tinto, a throwback to the British colonial days, should relocate its head office and primary stock exchange listing from London to Australia. It should also change its name and overhaul its white British establishment board which has jeopardised the company’s social licence to operate on country in Australia.
You could either do this with the whole company, or demerge the iron-ore business into a rebranded Perth-based company called Australian Iron Ore Holdings. This should have a majority of Australian-based directors including the first ever indigenous representative on an ASX200 board.
And while we’re at it, Rio Tinto should be paying much larger state royalties on its enormously profitable WA operations, a move which would help rebuild the COVID-ravaged WA state budget.
A royalty increase would also give the Chinese Communist Party a commercial slap for their continuing over-the-top campaign against Australia, which currently spans meat and barley export penalties, a ban on ministerial level communications, warnings to foreign students about racist attacks in Australia, and now the proposed execution of an Australian national.
All this has happened because Australia made the perfectly reasonable suggestion that there should be a thorough, independent investigation into the origins of the COVID-19 pandemic.
The 12 person Rio Tinto board comprises only three Australians — Simon McKeon, Megan Clark and Michael L’Estrange — and Australian ownership is barely 20%.
No other country tolerates a foreign company (one with the Chinese government as its largest shareholder) making more than $20 billion a year in gross profits exploiting its natural resources.
The economics are pretty staggering. Rio Tinto is forecasting that it will produce up to 334 million tonnes of Pilbara iron ore in 2020, costing it no more than US$15 a tonne to extract and ship. But with the iron ore price back through US$100 a tonne, 2020 is likely to be a record year, exceeding the unprecedented bonanza of 2019 when its Pilbara iron ore division generated $39.5 billion in revenue and an operating profit (EBITDA) of $23 billion (see page 13 of the company’s 2019 results).
No wonder they are keen to blow up heritage caves to keep this earner going. This whole combination of events and circumstances is surely unsustainable in 2020.
So, who will be the first Australian politician to call for Rio Tinto to ditch its London headquarters and relocate to either Perth, or its traditional home in Melbourne?