Taxes, royalties 'destroyed 75% of value of coal business'

AUSTRALIA is at risk of becoming an investment pariah, according to one of the world's top mining chiefs.

Fresh from his first tour of Central Queensland mine sites, Anglo American global chief Mark Cutifani told a Canberra conference the Federal Government had now shaken the very foundations that attracted Australia's massive mining investment boom.

Anglo American has eight operating coal mines in Australia, in Central Queensland and the Hunter Valley.

It is building the $1.7 billion Grosvenor coal project west of Mackay.

Mr Cutifani said taxes and royalties "have destroyed 75% of the value of our coal business in Queensland".

His firebrand comments came as mining giants Peabody and Xstrata this week revealed they would dump almost 500 jobs between them due to poor market conditions.

"In my simple world, I can find no other way to explain the policy uncertainty that has impacted the Australian mining industry over the last few years," Mr Cutifani said.

"While I can forgive ignorance, I cannot forgive the class warfare tactics that were used to split communities as the facts were lost in a sea of rhetoric focused on a few high-profile individuals."

He told the Minerals Council of Australia event that Australia needed to be competitive if it was to again benefit from China's growth.

But changes in the market meant Australia was being out-manoeuvring and the United States gas boom meant cheap coal was keeping down the price of Australian exports..

"The people feeling the effects of that jump in supply are the good folk of Central Queensland and the Hunter Valley," he said.

"Once profitable mines are now struggling with lower prices and in some cases, closing."

Just weeks ago, Anglo American announced it would shut down the now-unprofitable Aquila underground mine near Middlemount, affecting 80 workers.

He said the current estimates of 9000 jobs lost from Queensland and NSW mines "are about to rapidly increase" if media commentary was accurate.

"Let me be very clear, the Australian coal industry is at a tipping point for future growth and will only survive if governments want the sector to invest in the country and grow."

Federal Mines Minister Gary Gray told the same forum claims that Australia was being hostile to investment were "plainly wrong".

"Our reputation is unequivocally demonstrated by our significant remaining pipeline of investment," he said.

Mr Gray pointed to studies from the Behre Dolbear Group and the Fraser Institute which judged Australia as top country for investment.

But in his speech, Mr Cutifani wanted action.

He called for a "national development summit" similar to one held by then-prime minister Bob Hawke in 1983 that would act as a "reset button" bringing together mine companies, communities and governments.

It would act as a clean slate for discussion and planning for the future.

Mr Cutifani said he would expect it to deal with regulation, bickering between levels of government and infrastructure delays.

"In many ways, our industry needs to reset its relationship with government and society," he said.

"I think a national development summit would certainly be a good start."

>>View the full speech here