Miners demand Labor step up to protect resources security

The federal government should step in and defend the system it has set up to ensure resources companies have regulatory and fiscal security around new projects, Whitehaven Coal managing director Paul Flynn says.

Wiradjuri historian Lisa Paton.

The federal government should step in and defend the system it has set up to ensure resources companies have regulatory and fiscal security around new projects, Whitehaven Coal managing director Paul Flynn says, as gold miner Regis Resources warns that Australia’s “sovereign risk” has shot up following the blocking of its flagship McPhillamys project.

Environment Minister Tanya Plibersek last week decided to ­prevent construction of a ­tailings dam proposed by Regis near the headwaters of the Belubula River on cultural heritage grounds, but has argued that the decision does not block the mine, with Regis having 30 potential ­options for tailing dam sites.

Stuart Tonkin, chief executive of Australia’s largest gold miner, Northern Star Resources, also called out the government on Thursday, saying the perception of Australia as a safe place to invest was being eroded.

Whitehaven on Thursday ­announced a $US1.08bn ($1.6bn) investment by Japanese companies Nippon Steel and JFE Steel Corporation for a 30 per cent stake in its Blackwater metallurgical coalmine in Queensland.

The announcement came with a caveat from Nippon Steel that it felt compelled to make the deal, because onerous Australian coal royalty regimes, such as the Queensland system that charges up to 40 per cent royalties at the higher end of coal prices, meant new projects were unlikely to be developed.

Mr Flynn said the decision around the McPhillamys project was one of a litany of regulatory ­issues the sector had had to contend with in recent years.

“This is not a new issue, we’ve got a whole range of policy issues which are causing concerns for the industry, be that the Safeguard Mechanism, Same Job, Same Say policy changes,’’ he said.

“The EPBC (Environment Protection and Biodiversity Conservation) Act concerns that we have at the federal level are also front of mind for us. The legal system and the approvals system continue to be abused by anti-coal activists and one might argue that the government should take a stronger role in defending the functionality of the system they administer.’’

Regis Resources chief executive Jim Beyer said the minister’s decision had forced the company into a $192m write-down of the value of the McPhillamys project, pushing the company to a net loss of $186m.

He said the government's decision around the project “does make us a bit more wary” about investing in Australia, and said Regis was considering its legal options.

“There used to be parts of the world that we would not consider because of the sovereign risk and where things could be flipped for no reason,” Mr Beyer said.

“We did not think it could happen here. We will still consider Australia but it has certainly affected the attractiveness and we have to now consider sovereign risk in some parts of the country.”

Mr Beyer said finding another site for the tailings dam could take five to 10 years, “with no certainty of a viable alternative being ­realised”.

Northern Star boss Mr Tonkin said Australia had historically been seen as a “fantastic” place to invest, but that was slipping. “Every slow change like this just takes away some of that shine,’’ he said. “The flight of capital has ­choices, so if Australia is not sitting up there as a great jurisdiction to invest in, the capital goes to different countries.

“And then ultimately, when we want the metals back that we need to decarbonise, or have a more developed future, you’ll pay more for it.”

Ms Plibersek said: “Protecting cultural heritage and development are not mutually exclusive. We can have both.”