Value of QLD projects more than $115b: QRC

In its 2010-11 Federal Budget submission, the QRC highlights that the collective value of major Queensland resource projects either ‘under study, committed or under construction’ is more than $115 billion, but with a significant $107 billion still subject to final investment decisions.
“All that proposed new capital expenditure is at the mercy of market conditions and importantly from a government perspective, adverse changes to domestic policy settings,” said QRC chief executive Michael Roche.
“Right now, we’re rapidly closing in on final investment decisions for the world’s first coal seam gas-based export LNG industry with proposed expenditure totalling $55 billion.
“Making up most of the balance are new coal projects in the Surat and Galilee Basins and expansions in existing high quality areas such as the Bowen Basin.
“This is the start of a new era for Queensland and Australia and that’s why it’s essential for all levels of government to understand that capital on this scale can take flight with the stroke of a pen.”
Roche said there was growing disquiet among QRC members over a federal government response to the Henry Tax Inquiry’s reported support for a national resource rent tax regime.
“We believe that the Treasury cannot objectively advise Cabinet on the merits of the recommendations of the Henry Tax Inquiry and we’re calling for an independent assessment of these arguments before any decisions – even in principle – in support of far reaching reform are made.”
Roche said that despite the resource sector’s growth potential far exceeding all other sectors of the Queensland economy, recent history revealed failures to fully capitalise on global opportunities.
“The resources sector in Queensland has been hamstrung by a number of market and policy-induced capacity constraints in recent times.
“From 1999-2005, the sector as a whole kept ahead of global demand but fell away sharply from 2004 under the weight of capacity constraints including inefficient transport chains, cumbersome project approval processes and skills shortages.”
Roche said despite the strong potential of the resources sector over the next decade, little new investment was being proposed for the minerals-rich North West Minerals Province, centred on Mount Isa.
“This reflects a number of new investment constraints, notably a lack of affordable and reliable electricity, limited modern exploration in the area, and transport concerns - particularly the condition and capacity of the Mount Isa-Townsville rail corridor,” Roche said.
The QRC submission urges the federal government to address these shortcomings through the $22 billion nation building infrastructure fund announced in the last budget.
The QRC is also calling on the government to give the exploration a sector a shot in the arm by delivering in the upcoming budget on its 2007 election commitment for a ‘flow through shares’ scheme to stimulate the ability of junior resource companies to raise capital.
“Australia’s strong geological prospectivity is such that declining yields and falling mining industry productivity are entirely preventable,” Roche said.
Roche said that the Henry Review of Taxation has been looking at flow-through shares, but he warned that this important initiative should not be allowed to get caught up in a longer-term resource taxation agenda.