Mining giant Newcrest calls for urgent intervention in energy market

Mining giant Newcrest says failed government energy policies have created the need for market intervention.

Newcrest Mining chairman Peter Tomsett.

Mining giant Newcrest says failed government energy policies have created the need for market intervention, despite Australia having “every form of energy that’s known to humankind in spades”.

Orica boss Sanjeev Gandhi also backed federal intervention into gas pricing to help alleviate “absolutely unreasonable” spot market prices and called for a sol­ution that increased the long-term flow of natural gas into the domestic market.

The calls came after Treasury secretary Steven Kennedy backed the need for government intervention into the market and as the competition watchdog prepares to hand down recommendations on Friday to Jim Chalmers on intervention options.

Sources told The Australian a cap on domestic gas prices was expected to be included in measures proposed by the Australian Competition & Consumer Commission. The competition regulator has been tasked by Labor with finding a solution to the gas squeeze, including a focus on easing high prices.

In a statement to a Senate estimates hearing on Tuesday, Dr Kennedy said gas and thermal coal price increases were leading to “unusually high prices and profits for some companies” that were “well beyond the usual bounds of investment and profit cycles.”

He said poorer Australians were being hit the hardest and the viability of some energy-intensive businesses was in doubt.

Newcrest chairman Peter Tomsett told The Australian market intervention was required only because Australia had lacked a coherent energy policy for too long.

“If you don’t have a policy for long enough – which has been our situation – you wind up with a situation where intervention is required,” he said. “This need not have happened had the right ­energy policy been put in place. What we’re seeing is a symptom.”

Mr Tomsett said in his opinion, it was still not too late to develop a comprehensive energy policy.

“We have every form of energy known to humankind in spades. And we haven’t been able to harness that into a coherent policy that encourages the right investments to also meet our greenhouse gas commitments as a country.

“I believe it’s eminently doable. We just have to do it.”

Mr Gandhi said the crisis in ­Europe from Russia’s war on Ukraine meant Australia’s competitive position had strengthened compared with some areas of the world, despite high domestic energy prices, but a long-term solution was still needed.

“You do have pockets in the world where energy prices and gas prices are significantly better for domestic industry; we, on the other hand, are competing with exports to Asia, which is always a challenge for manufacturing in Australia,” he said.

Mr Gandhi said the explosives maker would like any solution to the crisis to be aimed at securing more supply into the market, “especially for Australian industry” alongside measures to “mitigate these peaks in spot pricing.”

Greens leader Adam Bandt on Wednesday sought to hijack Dr Kennedy’s push for market intervention to promote the minor party’s policy for a two-year freeze on energy bills and a windfall profits tax on coal and gas companies.

In a letter to Anthony Albanese, Mr Bandt said the Greens’ policy was consistent with Dr Kennedy’s comments.

Costings by the Parliamentary Budget Office suggest that the Greens’ policy would generate $25bn in revenue.

Additional reporting: Nick Evans