The state’s mining lobby will seek a “please explain” from Treasurer Tom Koutsantonis after he appeared to hose down Labor’s commitment to a long-awaited new deep sea port.
Koutsantonis was asked in parliament last week by Liberal leader Steven Marshall for an update of plans for the mooted port, but his response was anything but enthusiastic.
“We want to make sure that before we invest taxpayers’ money into a brand new deep sea port, those commodities actually have a market to go to,” the Treasurer said.
“The reality is that commodity prices are down, and that is a factor of international prices dropping around the globe. Prices for copper have dropped, prices for iron ore have dropped, and prices for oil have dropped. Everyone realises this, other than Her Majesty’s Loyal Opposition.”
Jason Kuchel, chief executive of the SA Chamber of Mines and Energy, said he had been made aware of the Treasurer’s remarks.
“We’re not sure quite what to make of it at this stage,” he told InDaily.
“We’ll be taking the opportunity to have a chat.”
The industry has long called for Government participation to fast-track a privately-funded port as a vital and pressing infrastructure investment.
Kuchel says he is awaiting a Government position paper in June, which was originally intended to be finished by this month.
Labor’s Jobs Plan at the 2014 election contained a commitment to lobby for federal funds for the “vital infrastructure”.
“We’ll be pushing for something to happen sooner rather than later,” Kuchel said.
He conceded it “takes more political courage to make a decision on a deep sea port in the face of lower iron ore prices” but insists “this is the time to do it”.
“By the time it will actually be built and completed, ready for first shipments of ore, the iron ore price will be well and truly on its way up,” he said.
SACOME has advocated for Government to help “de-risk” the project, for example by underwriting or assuming some ownership, to make it a viable private investment.
“To put this into context, we would probably not have an iron ore industry in the Pilbara today if it wasn’t for the West Australian Government back at the time putting in funds and various regulations in place for ports in the Pilbara,” said Kuchel.
“They’ve been expanded multiple times, but to get it off the ground it required that sort of investment.
“We often talk about most of our minerals being hard to find, but iron ore is really easy to find in SA – we’ve got it everywhere … The issue for most of it is the infrastructure required to get it to market.”
But Koutsantonis indicated he was unconvinced such a market currently existed.
A planned port at Port Bonython, near Whyalla, was granted major project status in 2012. But Arrium – formerly OneSteel – recently announced it was axing almost 600 jobs by “mothballing” its iron ore mine at Peculiar Knob around 90km from Coober Pedy, to optimise its operation near Whyalla, which the Treasurer referenced as he poured cold water on the imminent prospect of a port either near Whyalla or anywhere else.
“We have seen what has happened in Whyalla with Arrium, who have seen a dramatic drop in the iron ore price. Is the Opposition really calling on us now to invest in a deep sea port on Eyre Peninsula for more iron ore?” he said.
“We need to make sure, at Port Pirie and Whyalla, that those ports are making sure they are at capacity, and that we are using our current infrastructure effectively and properly before we start investing into new infrastructure … What would we be saying to Arrium, who have now got surplus capacity at their port due to a lack of demand for their iron ore — that we are investing in a new deep sea port somewhere else? What does that tell the people of Whyalla?”
He said the Opposition’s theory “of just building a deep sea port that could lie idle while those mines are trying to find markets to go to is just silly”.
Marshall told InDaily “we were a bit taken aback” by the Treasurer’s response, given “they’ve been talking about this for well over a decade”.
“It’s all very well to talk about relocating the drill core library, but the fundamental issue the industry keeps raising is the need for a plan for productive infrastructure,” he said.
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