Australian Miners Say Government Interference Hurting Sector
Australia’s mining CEOs criticized the imposition of carbon and mining taxes and said “government intervention” into the booming resources sector was hurting the industry.
Speaking to CNBC on the sidelines of the three-day Diggers and Dealers Mining conference, which got underway on Monday in the gold mining city of Kalgoorlie in Western Australia, several mining companies complained that the taxes together with the rising Aussie dollar were not letting them benefit from a surge in commodity prices.
According to Karl Simich, CEO of Sandfire Resources, the biggest impediment to doing business in Australia was the “constant intervention of the Australian government." He told CNBC that "We are dealing with high labor costs, the rising currency and strong demand but the one thing we can't control is what the government does."
Recent remarks by global diversified miner Anglo American that a carbon price could threaten its new investments in coal mines in Australia also set the tone for this conference, with many participants echoing similar concerns.
Analyst Warren Gilman, who is the CEO of CEF Holdings, said that taxes were topmost on investors’ minds when they looked to inject funds in Australia’s resources sector.
Instead of imposing taxes, American economist, Todd Buchholz, said the government should encourage investment in the sector, which would be a better way of taking advantage of the booming economy.
The other major concern of the miners was that the rising Aussie dollar was eating into profits.
Western Areas, which is one of Australia's biggest nickel producers, said despite the recent run up in commodity prices, miners based in Australia were seeing few benefits. Its Director of Operations, Dan Lougher, told CNBC there was very little miners could do to mitigate the currency's meteoric rise.
The Reserve Bank of Australia’s decision on Tuesday to keep rates on hold did result in the Aussie dollar dipping, but only marginally, to just below 1.10 to the greenback.
Australia-based gold producers also said they were struggling to see returns from surging commodity prices.
Ian Murray, Chairman of Gold Road Resources, told CNBC, "We would like the Australian dollar to be lower. When you price gold in Australian dollar terms the price has really been going nowhere."