❓ Opposition Leader McGowan questions Premier Barnett about a $15 million royalty concession granted to Gindalbie Metals for the Karara mine. Barnett defends the concession as an incentive for high value-adding magnetite processing and a signal of support for Chinese investment.
AnsweredQoN 12Legislative Assembly
QuestionView source ↗
GINDALBIE METALS LTD — ROYALTY CONCESSION
12. Mr M. McGOWAN to the Premier:
I refer to the Karara mine royalty concession announced last
week.
(1) Why did
the Premier give a $15 million royalty concession to mine operators Gindalbie
Metals Ltd for an already operating mine?
(2) Did
Gindalbie Metals request this concession or is it a $15 million gift to a
mining company?
(3) What
criteria were used to determine that this operating mine, which does not need a
concession to commence, would receive this taxpayer-funded largesse.
12. Mr M. McGOWAN to the Premier:
I refer to the Karara mine royalty concession announced last
week.
(1) Why did
the Premier give a $15 million royalty concession to mine operators Gindalbie
Metals Ltd for an already operating mine?
(2) Did
Gindalbie Metals request this concession or is it a $15 million gift to a
mining company?
(3) What
criteria were used to determine that this operating mine, which does not need a
concession to commence, would receive this taxpayer-funded largesse.
AnswerView source ↗
(1)–(3) The opening of the Karara mine, the first of
the Oakajee projects, was a great event.
Mr B.S. Wyatt :
Which project?
Several members interjected.
The SPEAKER :
Members, members!
Mr C.J. BARNETT :
The Oakajee project.
Several members interjected.
Mr C.J. BARNETT :
Members opposite laugh; they laugh. Do we know why they laugh? Do we know why
we get this childish little squirmy laughter? It is because Karara could not
get going under Labor; it had stalled. The whole environmental process had
stalled, and one of the first acts of this government was to sort out
environmental approvals over a three-month period and get Karara underway, and
get further approvals put in place, and get the Anshan Iron and Steel Group
Corporation fully involved in the project. When I opened the mine—one
of the things I get to do as Premier sometimes—2 400 people worked on
construction. Five hundred new operational jobs were created on the same day as
500 jobs were lost in the auto industry in South Australia and Victoria. It
tells us something about the development of Australia.
Mr M. McGowan : Why
the royalty concession to operate it?
Several members interjected.
The SPEAKER :
Members!
Mr
C.J. BARNETT : This is low-grade iron ore, which exists in this state in
vast amounts and which was thought never likely to be developed. It takes 36
per cent iron content and upgrades it to a 68 per cent iron content. It is a
premium product and it attracts 20 per cent more in the market because of that.
It has virtually no impurities and it is the product that Anshan and other
major Chinese steel mills want most. It is high value adding; it is not simply
being dug up and shipped out, as occurs with most of the iron ore production.
That is the long-term future of much of the iron ore industry.
Mr
M. McGowan : Yes, we understand that. Just answer the question.
Mr
C.J. BARNETT : About nine months ago, or maybe a bit less than that—six
months ago—I announced that we would provide some incentive in royalty
concessions to encourage not only Karara, but other projects, on a case-by-case
basis, to provide some royalty relief on basically a high value adding
manufacturing process over its first year of commissioning, which is an
expensive year. We did that, as happened to the original iron ore projects in
the Pilbara in the 1960s, which had very generous concessions. I think the
Gindalbie concession is modest. For that commissioning year the concession is a
50 per cent royalty rate for one year only. That is because this government
encourages economic development in this state, because this government can make
decisions.
Out of that, this government seeks to give a clear message to
China in particular that its investment is welcome and we want to build
long-term relationships in developing the magnetite industry, which is very
much an industry for China. That is why we did it.
the Oakajee projects, was a great event.
Mr B.S. Wyatt :
Which project?
Several members interjected.
The SPEAKER :
Members, members!
Mr C.J. BARNETT :
The Oakajee project.
Several members interjected.
Mr C.J. BARNETT :
Members opposite laugh; they laugh. Do we know why they laugh? Do we know why
we get this childish little squirmy laughter? It is because Karara could not
get going under Labor; it had stalled. The whole environmental process had
stalled, and one of the first acts of this government was to sort out
environmental approvals over a three-month period and get Karara underway, and
get further approvals put in place, and get the Anshan Iron and Steel Group
Corporation fully involved in the project. When I opened the mine—one
of the things I get to do as Premier sometimes—2 400 people worked on
construction. Five hundred new operational jobs were created on the same day as
500 jobs were lost in the auto industry in South Australia and Victoria. It
tells us something about the development of Australia.
Mr M. McGowan : Why
the royalty concession to operate it?
Several members interjected.
The SPEAKER :
Members!
Mr
C.J. BARNETT : This is low-grade iron ore, which exists in this state in
vast amounts and which was thought never likely to be developed. It takes 36
per cent iron content and upgrades it to a 68 per cent iron content. It is a
premium product and it attracts 20 per cent more in the market because of that.
It has virtually no impurities and it is the product that Anshan and other
major Chinese steel mills want most. It is high value adding; it is not simply
being dug up and shipped out, as occurs with most of the iron ore production.
That is the long-term future of much of the iron ore industry.
Mr
M. McGowan : Yes, we understand that. Just answer the question.
Mr
C.J. BARNETT : About nine months ago, or maybe a bit less than that—six
months ago—I announced that we would provide some incentive in royalty
concessions to encourage not only Karara, but other projects, on a case-by-case
basis, to provide some royalty relief on basically a high value adding
manufacturing process over its first year of commissioning, which is an
expensive year. We did that, as happened to the original iron ore projects in
the Pilbara in the 1960s, which had very generous concessions. I think the
Gindalbie concession is modest. For that commissioning year the concession is a
50 per cent royalty rate for one year only. That is because this government
encourages economic development in this state, because this government can make
decisions.
Out of that, this government seeks to give a clear message to
China in particular that its investment is welcome and we want to build
long-term relationships in developing the magnetite industry, which is very
much an industry for China. That is why we did it.
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