I challenge the statement “Australia needs to encourage and (sustain) mining exploration to reap the benefits of increased commodity prices.”

Once again the word sustain is being bastardized. Look it up. The plundering of “finite” mineral resources, as we Selfish Big Brained Mammals (SBBM) are doing, can never be “sustained”.

Finite and now almost certainly, diminishing global “energy” resources – primarily “oil”, will probably prevent the total exhaustion of many of our finite mineral resources in Oz but not before we have wreaked havoc on ourselves and other SBBMs by bringing on global warming as a result of this relentless quest for unsustainable economic growth powered by green house gas producing energy consumption.

One doesn’t need to be a Rhodes Scholar to understand the limits to growth.

Oo roo,

Bucko

Who is really reaping the benefits, Rio Tinto {Queen Elisebeth 11}, Australia for a miserly amount of taxes imposed on mining companies, the ordinary family sees nothing of benefits.

Whilst not disagreeing with the general sentiment of this article,
if incorrect original data is quoted in pursuit of making a valid case then it is somewhat going to change the context of any relevant discussion. I particularly refer to the authors' assertion there are only 22 ASX listed companies with mineral projects at an advanced stage of development because this is simply not true.

As of today (April 11th), there are 136 companies who's principal office location is in Australia who have minerals projects at pre-feasibility or feasibility study status. This means they are doing the numbers for a proposed development or new mine.

The problem for mineral exploration in Australia lies in companies not having access to exploration capital over a continuous period and a dearth of good or even average discoveries. In past years, exploration capital was extremely hard to obtain for the innovative smaller explorers because those in the financial arena do not seem to recognise these companies exist until they have a market cap of around $50 million or so. It is not rocket science to work out what happens to any industry if research capital is not available - people move into other industries and facilities are moved to regions where they will be put to work.

A flow-through share scheme has worked in Canada and should be considered here - if only because mineral exploration spend is in decline and the minerals exploration industry is slowly bleeding to death. Quite ironic when one considers that mining is in the midst of a global boom and not a very good reflection on the people who are supposed to be in charge of creating the conditions to enable the mineral exploration sector to flourish - the politicians.

Shonga asks "Who is really reaping the benefits, Rio Tinto {Queen Elisebeth 11}, Australia for a miserly amount of taxes imposed on mining companies, the ordinary family sees nothing of benefits." All Australians reap the benefits. In Queensland alone, the biggest single tax raised in the State is mining royalities (estimated to be $1,400,000 in 2005-2005 financial year). Royalities are paid on production, whether a company makes a profit or not, and the Federal company tax rate applies to profits. And the employees and contractors, subcontractors and suppliers pay tax. The mining industry input into the public purse is substantial. The authors of this artilce are right though, one can't take that for granted as its takes a decade to get a new discovery into production. It may be more fruitful for Shonga to think about whether Governments use the money from the industry properly or not.

An interesting combination of authors; a member of the Australian Labor Party and a member of the Liberals.

It doesn’t surprise me one iota that two people from these backgrounds can find overwhelming common ground when it comes to industrial and economic growth, and would believe that the current rate of exploitation of finite resources is not fast enough!

Oh if only we had an effective Democrats or Greens party to stand up against the continuous growth and short-sighted exploitation paradigm. But alas, both of them have totally lost their way.

“While Australian producers have been a major beneficiary of record commodity prices and fast-tracked expansion of brown (coal) field sites, we are still failing to realise the full potential of our minerals’ industry relative to other major mineral producers, such as Canada.”

Crikey, we are benefiting from high commodity prices and have boosted coal production accordingly…. but it is still not enough! One has to wonder what would be enough for the authors. It seems like nothing short of the most rapid rate of exploitation possible (‘full potential’).

How about we all start thinking of sustainability and of stabilising our exploitation of all sorts of resources, instead of this future-destroying constant ‘increase everything’ mentality.

Mineral wealth has done no favours for Australia.

The country has developed a severe case of Dutch Disease, an economic phenomenon described by the International Monetary Fund as "too much wealth managed unwisely", http://www.imf.org/external/pubs/ft/fandd/2003/03/ebra.htm

It draws its name from the damaged caused to the Dutch economy by exploitation of natural gas discovered there in the 1960s, http://www.economist.com/finance/displayStory.cfm?story_id=1795921

Wealth from export of extractables has allowed Australian commerce and government to coast, inhibited innovation and entrepreneurship, dampened emphasis on the importance of education, hurt manufacturing industry and allowed Australians to forget that the context of Australia's christening as a lucky country was:

"Australia is a lucky country, run by second-rate people who share its luck."

"Australia," Donald Horne observed, "showed less enterprise than almost any other prosperous industrial society".
We could do with fewer minerals and more enterprise, http://www.cultureandrecreation.gov.au/articles/luckycountry/

In the long run the country could be better off if the government made mineral exploration illegal instead of encouragiing it. If that had happened a few decades ago, people like Seibert and Collins might have chosen to study something productive like science or engineering, rather than law.

Excellent posts, Bucko, SHONGA, Ludwig and MikeM!

Australia's supposed economic boom amounts to little more than the destruction of our natural capital in return for manufactured artefacts and packaging that will largley end up in landfill in less than 12 months.

A national Government with the true interests of current and future generations of Australians at heart would take immediate steps towards the winding back all industries based on the extraction of non-renewable natural resources, particularly our coal, oil and natural gas.

It would also take steps ensure that what non-renewable resources that were extracted from now on, were put towards building the kind of infrastructure necessary to make this country, and others, sustainable rather than for the manufacture of throwaway junk.

Through flow shares are only part of the solution.

The boom will end when the infrastructure to transport the materials hits capacity. Not end as in collapse, but end as stop growing. As many mine sites are remote, are not electical or gas grid connected, many will also suffer from rising energy cost inputs (diesel).

Then there is the people factor. There have been as many busts as booms and in these the number of engineers, surveyors and geologists gets repeatedly culled. In these professional groupings there is a demographic time bomb - (average ages) > + 45. A graduate takes 4 years to produce. A graduate that can satify ASX and the Coprporations Act in terms of public reporting needs another 10 years experience.

The extractive industries are not carping about the lack of skilled labour for nought.

The tright response has been to import the skills, however the places we import the skills have the same boom, so this wont be a cheapish solution.

It is very rare, if not unprecendented, to have a multi-commodity boom, oil, the base metals, the precious metals, the bulks (iron ore and coal) all gangbusters at the same time.

Now industry is competing for a small pool of professional labour, instead of picking from a large pool of under-utilised labour.

So, demand exceeds supply, and supply is in-elastic.
Watch this space.

North Queensland is full of new minerals, but we can't even get a decent national highway section up here, so where do all the taxes go, not back to the part of the country from where they are generated that's for sure.

Shonga,

At the hands of one anal-retentive federal treasurer and a clutch of anal-retentive state treasurers, taxes are going to pay off all government debt. Peter Costello has announced that the federal government will be completely debt-free by tomorrow.

If any large corporation ran its balance sheet the way our governments do they would be laughed out of court. It is just as prudent to borrow modestly for projects (such as roads, rail and ports) that generate future earnings, as to avoid borrowing for current consumption that does nothing for the economy. Say goodbye to your home, municipality and the company that you work for. It is going down the tubes.

If this investment strike by governments continues we will eventually be in dire straits. The best that could happen is that private capital steps in and the whole of Australia ends up being owned by a Macquarie Bank investment trust.