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Wednesday, 7 December 1960

Mr KEARNEY (Cunningham) .- Mr. Deputy Speaker,as the honorable member for Lalor (Mr. Pollard) has stated, the Opposition supports this bill. As I see it, this measure focuses attention on an' economic matter that is a great national issue in this country - the unrestricted sale of Australia's basic metals without regard for the immediate needs of Australian industries. The trend in this respect and the errors in the Government's policy are no more clearly seen than in the copper indus try. The text of this bill has been very properly outlined by the Minister for Air (Mr. Osborne), and we see nothing to cavil at in the general assertions that he has made. The principles applying to the payment of the copper bounty are not being varied basically. The Minister has told us that the proposed provisions with respect to the duty and the bounty rates have become necessary because of a change of circumstances in the copper industry since the Copper Bounty Act 1958 was passed. The effect of this measure will be to give producers an increase of £5 a ton in the return that they receive for copper sold for use in Australia. The Minister went on to say -

However, it is expected that bountiable producers will be exporting greater proportions of their output than in the past. Their overall returns on copper produced in Australia may, therefore, be somewhat less than at present.

I take issue with the statement that it is expected that bountiable producers will be exporting greater proportions of their output than in the past. That observation, as I see it, pinpoints the issue from the manufacturing stand-point, and this is highly important to the producers of copper.

There are great production problems in the mines. These have been outlined by the honorable member for Braddon (Mr. Davies), who discussed the position of the Mount Lyell mine, in Tasmania. But there is another side of the picture. The Peko mine, in the Northern Territory, produces some 30,000 tons of copper concentrates a year. The production of that mine has increased greatly since it began operations, and its entire output now leaves Australia's shores. At the same time, the output of copper at Mount Isa has been increasing, and Mount Isa Mines Limited is treating increasing tonnages at its new smelter at Townsville, and is exporting large tonnages.

On a superficial examination, it may appear that we in Australia are in a very happy position with a bountiful production of copper. But there is another aspect of the matter. The big smelting plant of the Electrolytic Refining and Smelting Company of Australia Proprietary Limited, at Port Kembla, which has served Australia well in the past, is grinding to a halt because it cannot obtain supplies of copper. The position is serious, because, as a result, the operations of the establishment of Metal Manufactures Limited, which depends on the smelting plant for metal supplies, and which is in fact situated adjacent to it, are threatened by the drying up of its supplies of copper, despite the increasing output of copper ore in Australia. Metal Manufactures Limited employs some 1,200 workers and the Electrolytic Refining and Smelting Company some 700. Metal Manufactures Limited is now importing, at prices higher than those of the Australian product, copper in various forms in order to maintain its level of production.

We find in these circumstances an apparent contradiction on which this Parliament ought to focus its attention. Australia's copper industry is subject to a two-way squeeze, which will cause a definite major disaster if it continues. This squeeze is the result of two forces - the flood of goods from cheap-labour countries such as

Japan, on the one hand, and the Government's attitude as exemplified by its permitting copper producers to export, if they wish, every ton of copper that they produce, regardless of the country to which it is exported and of the needs of manufacturers and treatment plants in this country.

I have mentioned the smelting plant of the Electrolytic Refining and Smelting Company, at Port Kembla, which is an important establishment of considerable significance to manufacturing and development generally. Let me inform honorable members a little more fully on the situation at Port Kembla. During the past year, two new industrial plants have been completed there at a total cost of £1,250,000. One was a sintering plant, which was constructed by the Electrolytic Refining and Smelting Company for the preparation of copper concentrates for smelting. In this treatment process, considerable quantities of sulphur-bearing gases are produced, and the second plant, which was constructed by Australian Fertilizers Limited, was designed to treat these gases.

I am informed that other local construction work involving an expenditure of more than £2.000,000 is in progress and that it was undertaken on the understanding that the Electrolytic Refining and Smelting Company's smelter would be able to supply the copper required by these new establishments. I am also informed that its ability to continue operating the sinter plant has so weakened its economic position that it is extremely likely that this plant will have to be closed down in the very near future. This means that a very valuable plant, which should be making its contribution to Australia's export earnings by the exportation of copper bars and ingots, will not be turning a wheel. The main reason for that is that the Peko Company has withdrawn from its agreement to supply the Electrolytic Zinc Refining and Smelting Company, or E.R.S. as it is called, and is now selling its total output to Japanese interests at higher prices. This is placing important Australian copper industries in a difficult position, and is causing great concern to the people in my electorate. Indeed, it must have a detrimental effect upon Australia's economy. After all, the Townsville smelting plant is only just beginning operations, and it would seem that the E.R.S. plant is faced with closure because of the Government's failure to take positive action to ensure that a reasonable percentage of Australia's copper production shall be retained for treatment in Australian plants. Another disastrous effect of such a policy could be the closing down of small plants such as those at Mount Lyell, Lake George, Cobar and others. They are faced with the possibility of closing down overnight because the big interests in north Queensland would not dream of treating copper produced at any place in southern Australia. Up to the present time, the Government has sought to maintain such isolated mining communities as Mount Lyell, but those smaller companies will disappear under this proposal because it would not be economic for the smelters of far northern Queensland to treat copper produced anywhere south of the Queensland border. Because of this, the Electrolytic Zinc plant at Port Kembla is of paramount importance as a source of raw material for southern industries.

I have mentioned this matter on many occasions to the Minister in this Parliament. In effect, he has said that the Government believes in free trade, that the person who produces any commodity should have the right to sell it wherever he wishes in order to gain the highest possible price. The fact is that this bounty fixes the price for copper in Australia, and what the Government would have us believe is a competitive field is not in fact a competitive field so far as the E.R.S. plant is concerned. The position is that the Australian producers of copper can sell their product wherever they like outside this country, and so denude Australian industries of vital supplies. The people of Australia cannot be expected to stand for a policy such as that. No government has the right to sell our heritage - irreplaceable base metals - to outside interests, especially at this time in our history. No government has the right to dissipate our base metal production to the extent that development of Australia's smelting industries is not only retarded, but in some instances halted. Because Japanese interests have the support of their government, they are able to offer the Peko Company much higher prices for its products than obtain in Australia. It is obvious that the Australian Government must place an embargo upon the exportation of copper from this country if adequate supplies for our internal industries are to be ensured. So far, the Government has failed to do that, and this failure has led to the present acute shortage of copper. After all, it is absurd to expect the Australian taxpayers to submit to the payment of a bounty on copper if we are to get only the small end of the stick, as it were; if producers are to be enabled to sell the whole of their production to interests outside Australia and so deny our own people the opportunity of permanent employment.

Let me deal once again with Peko. A statement issued some time ago disclosed that the price which the Japanese interests are paying to Peko is based on the standard United States official export price, which, in May, 1960, was about £330 Australian a ton. and that Peko will receive 95 per cent, of the value of shipment on sailing date, and the remainder within two months. The directors of Peko say that this arrangement reduces the costs of production, smelting and realization of the copper much b

In reply to a number of questions asked of him by me, the Minister for Trade (Mr. McEwen) stated in this House that copper concentrates were sold on the market, that the Australian user was as free to buy these as was any one else, and that copper concentrates were no different from any other commodities which Australia had surplus to its requirement. Those statements are all in direct conflict with facts. The position is that the world is short of copper concentrates due to intensified buying by Janan, Russia and the Soviet-dominated Polish refineries. These three countries are virtually establishing a corner in non-captive supplies of copper ore concentrates and blister copper. They have been able to outbid European and Asian refineries because of their controlled economics. In short, all three countries pay substantially above world prices for raw materials and inflate their domestic price for refined copper to subsidize the purchase of further raw materials. That is the sort of thing that the Australian copper smelting and prefabricating industries are facing, and the difficulty can be overcome only by this Government. It must take action to protect Autralia's industries. While subsidizing the purchase of further raw materials, the three countries to which I have referred maintain control over domestic production. This is in direct contrast to the policy of this Government, which permits the free export of raw materials, irrespective of local needs.

In May, 1958, the Minister for Trade mct the Australian copper producers and told them that he was prepared to give effect to a Tariff Board recommendation that assistance be given to the copper mining industry. It was desired, however, as a condition of this assistance, that the price of refined copper be reduced to £285 a ton. With a bounty of £45 a ton, this would stabilize the price of copper at £330 a ton. In a statement to the House on 14th May, the Minister confirmed the acceptance, in part, of the Tariff Board's recommendation. It also confirmed the agreement to peg the domestic price at £330 a ton.

I think I have clearly indicated that this matter has been consistently before the Minister concerned, and the Government's attitude throughout has been as I have outlined it. The Minister has stated that the Australian smelter rs as free as any one else to buy raw material. The facts give the lie direct to that assertion. The situation is that the Australian purchaser is not free to buy Australian raw materials; he is forced on to the overseas market to get his copper. The limitation on the Australian price for refined copper and, therefore, on the price that can be paid for copper concentrates, has caused companies such as Peko Mines, N.L. to enter into agreements with Japan. The Government should have anticipated this possibility. Its policy on this issue is lopsided. I refer to its control of iron ore, on the one hand, compared with its attitude to copper, on the other. It should have insisted on producers and smelters reaching voluntary agreement to ensure that Australian industry was protected. That rs the milk in the coco-nut. The Government has stood idly by and permitted the law of the jungle on an international basis to prevail.

Australia, to-day, finds itself with inadequate supplies of copper concentrates which are needed to maintain a very large, important and productive smelting industry. That industry is the life blood of a great number of people on the south coast of New South Wales. It makes it possible for a number of large and important prefabricating plants to operate. The future of those plants is now being placed in jeopardy. In order to maintain themselves, they will have to purchase large quantities of copper from overseas. We are shipping copper out one door and paying through the nose to bring it in another. I would like the Minister for Trade (Mr. McEwen) to let us know something on this point.

Up to this month the metal manufacturers at Port Kembla have had to import £1,000,000 worth of copper in different states in order to keep their plants going. That shows the complete laxity on the part of the Government in fostering the important copper industry which is markedly important to this country's economy and to its survival, both under peaceful industrial circumstances and under adverse circumstances. There is a difference in the Government's policies with respect to different basic raw materials. I have already alluded to this. In order to assist the steel industry, the Government placed an embargo on the export of iron ore. That embargo is now in the course of some degree of amendment. There is a control over the export of steel scrap. So, while control has recently been tightened in respect of one item there are now suggestions that iron ore from certain areas should become a permissible export. Of course, that is a question on which our party joins issue with the Government parties.

There is complete freedom to export copper concentrates, irrespective of the requirements of local industries which are dependent on their output. At the same time, there is no control over the export of copper scrap. That pinpoints the argument that I am continually hammering in this matter, namely, that the Government is not doing the right thing by this country and placing Australia first if it allows our industries to be denuded of that proportion of our natural products which they require. Base metals are not replaceable. They cannot be regrown. Once we have gouged so many tons from the earth, they will never go back again for posterity. We, the legislators of this country at this day and hour, have the obligation of studying these matters from the point of view of the great developments that will occur in Australia in the progressive century that lies ahead. Australia will be a fantastic nation in that time. Our economy unquestionably will be based on wonderful manufacturing industries. The ingredients necessary will unquestionably be of a metallic nature. Consequently, I cannot emphasize too often the principle that is involved in the copper industry.

I trust that the Government will look further than its nose and will no longer regard itself as bound to permit certain sections of the community to make a swift quid at the expense of the future of this nation. The Government has been asked to help ensure that sufficent raw materials are retained in Australia to enable the Electrolytic Refining and Smelting Company of Australia Proprietary Limited plant to provide continuity of employment and meet the needs of customers. It has also been asked to regulate the export of scrap. The Government obviously sees difficulty in giving effect to these requests. I led a deputation to the Minister for Trade from two major trade unions in New South Wales a few weeks ago on this issue. They were the Australian Workers Union and the federated ironworkers union which are vitally concerned about the fate of their members.

I asked a question of the Minister for Labour and National Service (Mr. McMahon) with respect to the fact that more than seventeen employees had left the payroll of the E.R. and S. company and that further dismissals were pending. The Minister said that there was plenty of employment in the steel industry in the Port

Kembla area for these people to go to. Of course, he overlooked the important fact that not only the people who have left the pay-roll of E.R. and S., but also some of those who are still on it, are receiving from £5 to £15 a week less because they are not employed in their normal occupation such as that of furnace-man or labourer. The earning capacity of these men, who are highly skilled in the copper industry, has been reduced. The Government cannot find alternative employment for them equal to that which they left. The Government cannot rightly claim that suitable alternative employment is available just because it has 100 vacancies in the steel industry for 100 men who have left the copper industry. The workers in the copper-smelting industry are the ham in the ham sandwich. Economically speaking, they have been cut to pieces. The exporter of copper is all right. Peko is doing better than ever. The people who are suffering most directly are those least able to suffer - the workers in the industry.

The E.R. and S. company is not without fault in respect of its business alinements. I understand that the company did not have a firm agreement with Peko Mines for the supply of its production, but had something in the nature of a gentleman's agreement - an understanding that it would continue to be supplied. Like all business understandings, when a quid can be made, this one went down the drain very fast. There was no legal document to hold Peko production to the E.R. and S. plant in Port Kembla. The sufferers are the E.R. and S. company, which had expended £1,000,000 on plant, and Australian Fertilizers Limited, which had had allied expenditure in producing the gases for sulphuric acid production. I think that something positive should be done along the lines that I suggest.

The Minister for Trade has stated that there will be a greater volume of exports in the future than in the past. It is a sorry day for this country that we should be exporting one iota of copper before the needs of our own industries have been met. The same trouble exists with respect to another aspect of our copper production. Ravensthorpe Copper Mines, N.L., will sell its concentrates to the Mitsui Mining and Smelting Company Limited of Tokyo. This was announced by Mr. M. R. Lodge, chairman of the Ravensthorpe company, only 24 hours ago. The Mitsui people are buying out the Ravensthorpe field, lock, stock and barrel by subscribing for £400,0&? worth of shares. Ravensthorpe will become a second Peko. Its copper production will disappear down the chute of international trade to Japan.

It is not inconceivable that Australia will have to import prefabricated copper articles from Japan before we are very much older because of the general tendency that is now occurring. That is no fancy. Another thing that is no fancy is that the E.R. and S. plant at Port Kembla could cease to function as a smelting plant. That is a reasonable proposition at this stage. The Australian Tariff Board report, at page 14, makes it clear that the existence of E.R. and S. is in dire jeopardy because of circumstances to some of which I have drawn honorable members' attention. The Government should not permit this trend to proceed. It should take action to curtail or stop this rape of Australia's basic materials and should give consideration to the needs of our own industry. The Opposition does not say that we should not export any copper at all. That is not the issue. The point is that we have first call on production. We should also build up a surplus to ensure that we have adequate reserves to meet any emergency. If we are in a position then to dispose of some of it, we can still share some with the rest of the world. The Tariff Board report of 20th May states at page 14 -

The importance of E.R. and S. lies in the fact that it provides an essential and specialized facility in the production of unwrought copper and its costs therefore affect the cost of production of a significant proportion of the Australian output of refined copper.

Are we going to see a situation develop where copper comes under that great monopoly in north Oueensland? Is that what is behind all this combination of circumstances and the hesitation to take positive action? There is a nigger in the woodpile, and we should be told the facts. The Tariff Board also reported -

Evidence was given that Peko whose production had previously constituted a major source of concentrates to E.R. and S. has entered into a seven year contract to export all its copper concentrates to Japan.

Why does not the Government put a smelting plant in the Northern Territory to handle the production of Peko? Why not do some of the work in Australia instead of sending our raw materials outside the country? It is obvious that the Tariff Board has given consideration to all aspects of the matter and has made firm and deliberate suggestions to the Government, lt has emphasized the need for the Government to do something positive, and I refer the report of the Tariff Board to the Minister in charge of this legislation.

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