Lang Hancock, “OUR MINERAL POLICY IS ON POOR GROUND,” Sunday Independent, November 4, 1973, p. 16.
In searching for a policy to keep our minerals within Australia’s shores for Australia’s benefit (which on the face of it seems quite a laudable aim), the present Federal Government’s theories are unfortunately resting on shaky ground.
In seeking to make Australians better off by direct Government participation in the production and marketing of these minerals, they have over-looked firstly the fact that “Governments do not create wealth, they consume it,” and secondly, as Milton Friedman says: “The Government’s solution to the problem is usually as bad as the problem.”
Until they stop to consider the matter in depth, patriotic Australians will at first agree with the Minister for Minerals and Energy, Mr Connor, when he says: “I have disallowed a number of farm-ins on the North-West Shelf for the very best reasons, namely that the North-West Shelf happens to be the property of the people of Australia.”
In expressing these patriotic sentiments, the Minister overlooks the basic fact from which all mineral discoveries spring and without which there can be no new discoveries — absolute security of tenure, guaranteeing that the discoverer has first rights to his discovery.
I am not arguing the rights or wrongs, ethics or patriotism of the case. I am simply stating an elementary fact in practicality essential to the discovery of minerals throughout the world.
For a Government to break faith in this regard imprints the kiss of death on any hopes of Australia being self-sufficient in minerals.
A further fallacy is the selfish belief that some of the world’s greatest mineral deposits belong exclusively to the 13 million people of European extraction who have occupied this continent for approximately 200 years, and that during these 200 years, we have done enough to earn the exclusive right to these basic materials despite the fact that they were created some 1700 million years ago, without government aid and not for the purpose of adding power to Canberra.
Is there any guarantee that these riches will not in the near future be regarded by the remaining 3000-odd million people of the world (most of whom are very much worse off than Australians) as a global heritage, and not the exclusive province of the Australian Government to sit on?
Let’s be practical. Australia is not militarily strong enough to maintain jealous ownership of these minerals in the face of international pressure and external threats. Throughout mankind’s history, ownership (regrettably) has been established by conquest and maintained by might alone.
This means that it would surely be wiser to turn the more vulnerable of these minerals into cash quickly so as to provide the means to acquire and build a sophisticated defence system of our own as speedily as possible, and at the same time ensure our indispensability to a couple of the major powers by becoming their most reliable life-line of supply of strategic mineral?
This applies particularly at the moment to the export of LNG from the North-West Shelf — that is, assuming (as the Government undoubtedly does) that the operating companies can overcome the enormous engineering and cost problems involved and so become economic.
This would enable Australia to take advantage of its limited life, both as regards a premium market for LNG (said to be about 15 years) and the time during which the world will allow it to remain in Australian hands.
One of the greatest fallacies upon which Government thinking is based, is that there is lodged somewhere in the depths of some Government department a crystal ball which will show the Government just what our total resources and Australia’s foreseeable requirements actually are.
It is because of an honest belief in this delusion that the Government has propagated the theory that they will be placing Australia’s interests above everything else by refusing to allow the export of any of these minerals until they have made certain Australia’s requirements are first taken care of. Noble sentiments, nobly expressed, but just what is the past Government record with regard to the crystal ball?
Well firstly, Canberra in the Menzies era imposed a 30-year embargo on the export of iron ore because the crystal ball told them that by 1965, Australia would be importing iron ore, when in fact the true position is that Australia can supply the whole world for centuries.
Secondly, the crystal ball computed that Australia’s total reserves of vital manganese was a mere 80,000 tons. Since they lifted the export embargo, something like 60 million tons has been found at Groote Island and probably even greater tonnages will be proven in the Pilbara.
Crystal ball No 3, in the form of Bureau of Mineral Resources’ bulletin of 1966, says in regard to the Koodaideri deposits of iron ore lying along the Fortescue Valley, that the biggest deposit there was a mere five to 10 millions tons and adds: “There are numerous minor occurrences of haematite along the northern front on the Hamersley Range … in most deposits the ore is patchy and seems unlikely to persist in depth … but none are of economic dimensions.”
Obviously, somebody forgot to polish the crystal ball, because to date, some 2200 MILLION tons of iron ore have been proved in the Koodaideri orebodies. The list of Government misjudgments of our resources is practically without end, yet the Government still doesn’t seem to understand the impossibility of trying to base an economic policy on such hopelessly misleading data.
Let me again quote Mr Connor, who said: “Our primary objective is to measure and space the development of the resources so that they will be available for generations to promote the industrial development of the nation.”
Such a false premise is rendered more inexplicable when one considers that the Treasury’s economic White Paper No 2, which explains the foolishness of trying to make accurate forecasts of minerals reserves, is available to all ministers.
The Treasury says:
Questions about the availability of raw materials to sustain continued economic growth in the long-term future cannot be answered by reference to the stock of “reserves,” and could not be even if we knew the entire stock which would be available for development in the future, given the maintenance of present economic and technical conditions. This is because those conditions will inevitably change quite radically as the decades pass, and in ways that defy prediction.
It is therefore not possible to ascertain the supplies of particular minerals which will ultimately be available, or, for that matter, the supplies which will be required in the far-distant future. There are, however, grounds for confidence that the continued pursuit of economic growth will not leave future generations without the physical wherewithal to maintain living standards.
It has been estimated, on the evidence of a big number of random samples, that the total natural occurrence of most metals in the top mile of the earth’s crust is about a million times as great as present known reserves.
I believe it would be more realistic for our Government to encourage the rapid export of all minerals to take full advantage of the temporary fuel and energy crisis. To design a policy in the belief that we will always be able to command a market and a premium for our energy minerals is building on a dangerous misconception.
As far as Australia is concerned, we have ample uranium, not only to take care of our power requirements during the nuclear age, but a goodly part of the outside world as well until such time as solar energy takes over.
If you are not convinced by this argument, how about considering tidal power? If our Kimberley tides alone were harnessed they would supply 150 times the total present power output of the whole of Australia by all types of power generation. If figures mean nothing to you, then convert it to a population basis and you will realise that if the Kimberley tidal power was properly harnessed, it could fulfil half the world population’s present power requirements. Some energy crisis for Australia!
Advocates of a selfish “resources policy” are no doubt influenced in their thinking by the present attitude of the oil producing Arab States, who believe they have have the Western world over a barrel. For a defenceless country like Australia to indulge in such a provocative attitude is surely suicidal.
I believe the world will heap dreadful retribution on the Arab States, either because their attitudes will lead to World War III, in which their countries would be decimated by the major powers using it as a battle ground, or else the search for alternative supplies of oil or other energy sources will receive such an impetus that the tables will be turned on the Arabs and they will be left holding the baby, just as the search in Australia is being shifted to Indonesia, Burma etc by the present Australian Government’s policies.
Already, Texasgulf Inc has announced a significant gas condensate discovery offshore from Louisiana and a research project unlocking major oil reserves in Saskatchewan.
One area of emerging interest to the major energy importers — America and Japan — is the new field off China, which must remain undeveloped until China is able to import technology. So far, its source of expertise has been limited to being provided from either Russia or Japan.
Perhaps this is why the US has suddenly taken an interest in China, a country which imposes no commercial, industrial or military threat to the US, whose 800 million strong cannon fodder has only twice the industrial output of 13 million Australians, and in fact produces only 60 per cent more steel than one company in Australia.
Seeing that the welfare and safety of Australia should be of paramount importance to any of our Governments, why doesn’t Cabinet simply acknowledge the fact that Australians will be getting their standard of living doubled in 10 years and that the Government is already getting well over half the profits from the export of Australia’s major minerals without any risk or contribution on the taxpayers’ behalf?
Surely this is better than risking the taxpayers’ money to buy an interest in some venture which in the end may result in a total loss, remembering that both their crystal ball and the AIDC’s (the Government’s instrument of nationalisation) record in the past doesn’t lend confidence to the belief that the taxpayer would be better off by his Government’s involvement in these risk ventures.
In the past week, we have seen published the results of two firms in the same business of iron export. One made a profit of $7 million and the other a loss of $7 million. It goes without saying that Government money and support has been involved in the project that incurred this loss — not the profitable one.
For my part, I must agree with the Treasury when it says:
If we exploit this planet’s mineral resources now, future generations will not necessarily be any less affluent than if we made a concentrated effort to conserve mineral resources for their use. Indeed, if conservation policy took the form of slowing or stopping economic growth, they would be much less well off than they would otherwise have been.
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