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Wednesday, 9 November 1938


Mr GREGORY (Swan) .- I move -

That StatutoryRules Nos.65 and 80 of 1938, amending the Customs Regulations, be disallowed.

The purpose of my motion is to . upset the arbitrary action of the Government in making regulations under the Customs Act in order to prohibit the export of iron ore from Yampi Sound. I thank honorable members opposite for their vote against the motion of- the Minister for the Interior (Mr. McEwen) for the postponement of all intervening business on the notice-paper until after my motion had been disposed of, because it showed that they have sympathy with my motion. They know that, if my motion were not discussed and disposed of, either to-day or to-morrow, the regulations, for the disallowance of which I have moved, would become void. That would have achieved my objective. But it was because of that fact that the Minister for the Interior moved his motion. The attitude taken by honorable members opposite assures me that I shall have their support when a vote is taken. I ask honorable members to realize the significance and importance of the regulations which I seek to have disallowed. The Ministry, without consulting Parliament, and without endeavouring to bring down legislation to deal with the subject, gazetted customs regulations of vital concern to the policy of this country. Similar methods wore adopted with the trade diversion policy, which caused immense losses to graziers and wheat-growers, and honorable members should resent such important decisions being applied without the approval of Parliament. There is too much apathy among honorable members of Parliament towards Executive action without the authority of Parliament. A long period has elapsed since I placed my motion on the notice-paper, but, until to-day, when it was realized by the Government that it would have to be disposed of, I have not had the opportunity to move it. Members of this Parliament are losing that control of Parliament and of legislation which is essential to the best interests of parliamentary government, and it behoves them to enforce their rights.

It is worth while to recall the events which led up to the imposition of the embargo on the export of iron ore from this country. It was imposed simply as the result of the report of a departmental officer to the Ministry. It was the most drastic action that it was possible for the Government to take, and its results have been detrimental to the interests not only of the State of Western Australia, but also, I venture to suggest, of the Commonwealth as a whole. The embargo could quite possibly have become a major issue resulting in hostility to Australia on the part of other nations. When a government does something that is likely to cause serious trouble, it is the duty of this Parliament to decide immediately whether or not its action is justified. For a long time prior to the imposition of the embargo all of the actions of the Government in respect of the export of iron ore, showed that it had no objection to it; but there was a sudden change of policy, and an embargo was enforced. In substantiation of my claim that the Government made a volte face, I shall, at a later stage, quote from Hansard and various documents. There would have been extreme antagonism towards an embargo had it been imposed even early in the history of the development of the iron ore deposits at Yampi Sound, when comparatively little expenditure had been outlayed; that antagonism must be intensified now when tens of thousands of pounds of expenditure has gone for nothing, because of the Government's change of policy. It is in the interests of Western Australia that I have moved this motion, because that State will undoubtedly suffer a great financial penalty as the result of the Government's action. Another motive that actuates me is the fact that for more than 20 years I have advocated greater freedom of trade between nations of the world. That I am not alone in that attitude is amply shown in the annual report of the Department of External Affairs for the year ended, the 31st December. 1937, page 65 of which contains the following passage : -

The Economic Committee (of the League of Nations) has also formulated a number of principles which in its opinion governments should adopt, viz.: -

(1)   Raw materials should not be subjected to any export prohibition or restriction, except in pursuance of an international regulation scheme. . . .

(2)   Foreignersshould have the same rights and facilities as nationals to develop national resources in any particular country or colony, subject to compliance with the laws and regulations of the countries concerned. . . .

On the one hand, we have the Minister for External Affairs advising the people of Australia and members of this Parliament as to suggestions that have been made by the Economic Committee of the League of Nations on the need for breaking down international trade barriers, and on the other, the Commonwealth Ministry, including the Minister for External Affairs, agreeing to do the very thing which it was counselled not to do in these suggestions. It was as the result of a somewhat similar policy in Europe that this country, along with other countries of the world, a few weeks ago was confronted with the likelihood of a repetition of the horrors of 1914-18. The situation was engendered by Germany, like Italy, previously, and Japan, even now, demanding expansion. In Australia we have an area, almost the size of the United States of America, supporting a population of about 7,000,000 people, which, in itself, presents a grave menace to this country's safety. Yet, when there is more than a possibility of the develop- ment of a sparsely-settled part of this. great nation by the development of the iron ore deposits on the north-west coast of Western Australia, the Government prevents that development by prohibiting the export of that ore.

Only a few weeks ago we were oppressed by the fear of war, with a renewal of all the horrors of 1914-18. The League of Nations has proved to be a complete failure in its efforts to preserve peace. Pacts of non-aggression and of mutual assistance have been found wanting. Not only have they not prevented war, but also they have not solved the primary essential of the cause, of war. We ought to do more than spend millions of pounds to protect ourselves; we must go to the people and tell them the fundamental causes of war. And restraint of trade, excessively high tariff restrictions, embargoes on imports and exports, are undoubtedly those fundamental causes. They breed discord, antipathy and a sense of injustice. When we extend the policy to the application of an embargo on raw materials in the manner that we have done, we flaunt a policy of "what we have we hold ", irrespective of the needs of the nations of the world.

The embargo applies only to iron ore, but honorable members know that for years past hundreds of thousands of tons of iron ore have been exported from Australia, by, not an outside organization, but the Broken Hill Proprietary Company Limited, the only great smelting company that we have in Australia. At the present moment, the Government, by licensing exports, is allowing that company to meet contracts which had been made for the delivery of iron ore overseas, up to the end of 1938. I cannot imagine that it was the Broken Hill Proprietary Company Limited that informed the Government there was likely to be a shortage of iron ore in Australia, because it would be a strange thing, if it had that information, for it to be exporting vast quantities of iron ore for many years to japan and the United States of America. It has been said in support of the embargo that iron ore is an essential to the manufacture of munitions for war purposes, but I remind the Government that there are other materials equally essential for that purpose, the export of which from Australia remains unchecked - pig iron, iron and steel, copper, spelter, wolfram, tantalite, and scrap iron.

At least three years ago the Government was aware of the development that was taking place at Yampi Sound, because certain questions about the project were asked and answered in this Parliament by the then Acting Prime Minister (Sir Earle Page). About a year later another question was asked as to whether certain Japanese assayers were to be allowed to enter the country in order to watch the operations of the company. I am constrained at this point to emphasize to honorable members that the laws of Western Australia do not permit Asiatics to work on mining projects in that State. I also emphasize that the company which was set up to exploit the iron ore deposits at Yampi Sound was an English company which had financial assistance from Japan. Only people of our own nationality could be employed at Yampi Sound. The honorable member for Maribyrnong (Mr. Drakeford), three years ago, asked a number of questions relating to the export of iron ore from Yampi Sound and in doing so explained the position from his viewpoint. The right honorable member for Cowper, in his capacity as Acting Prime Minister, answered the questions thus : -

2.   Leases have been granted by the Government of Western Australia to Messrs. H. A. Brassert and Company Limited, of London, in respect of iron ore deposits at Koolan Island, Yampi Sound. 3 and 4. See reply to 2.

5.   Messrs. H. A. Brassert and Company Limited is registered in London.

6.   The leaseholders, Messrs. H. A. Brassert and Company Limited, have entered into an agreement with the Nippon Mining Company, of Tokyo, Japan, under which the latter company will provide approximately £300,000 by way of loan to an operating company to be formed for the purpose of working the deposits, on the understanding that the Nippon Mining Company will take the whole of the output.

7.   The iron ore will be shipped to Japan.

8.   At the end of 1935. when this project first came under notice, the United Kingdom authorities were consulted through the High Commissioner in regard to the desirability of reserving these deposits for Empire purposes, and advice was furnished to the effect that -

(a)   Iron ore deposits of the world are so extensive that there is no need to consider the conservation of Yampi Sound deposits for future Empire purposes ;

(b)   There are other Empire deposits, greatly rich much closer to Europe which it is impossible profitably to develop for Empire purposes. Consequently there is no question of the development of Yampi Sound with the aid of the United Kingdom Government-

I emphasize the paragraph -

(c)   Although not at present required for Empire purposes, the deposits would be of more use in emergency if some steps had been taken to develop them, and if the ore was readily available.

Some months ago, I pointed out to the Government that the great deposits of iron ore at Yampi Sound would be useless unless some developmental work in connexion with them were undertaken. The original contract was for 25,000,000 tons, but, later, the quantity was reduced to 15,000,000 tons. If an emergency arose, how different the position would be if development had proceeded to that stage ! A syndicate in Western Australia expended over £8,000 in 1922 in an attempt to get British people interested in these deposits, but the people in England pointed out that the distance from that country was so great that they could not associate themselves with the enterprise. Yet there are people in Australia who tell us that the decision of the Commonwealth Government was made at the request of the British Government. There has been no request by the British Government for such action. The answer of the Minister continued -

(d)   It would serve no object, and it would not be desirable to prevent Japan obtaining its ore from this source. There are many other sources available.

That was the opinion of the Government at that time. On the 22nd May, 1937, Sir George Pearce, who was then Leader of the Government in the Senate, said-

The Commonwealth Government considers that any effort to restrict Japan's access to the iron deposits at Yampi would be dangerous. It would strengthen Germany in her claim for the restoration of colonies by enabling her to demonstrate that the Empire was restricting access to the natural resources of the dominions.

The annual report of the Department of External Affairs pointed out the same thing. Sir George Pearce's statement continued -

Moreover, since one of Japan's chief sources of iron at present is British Malaya, and since the British Colonial Office has made no effort to restrict purchases for Japan in that colony, it is evident that the British Government is in agreement with the policy of the Commonwealth that restrictions should not be imposed on foreign customers.

On the 31st August, 1937, the Prime Minister (Mr. Lyons) said -

I wish to dispel any misapprehension that may exist in regard to the attitude of the Commonwealth Government in connexion with the export of iron ore from Yampi Sound. A preliminary survey of the potential supplies of iron ore has revealed the existence of very considerable deposits, sufficient for all our requirements for a great many years ahead.

The exports of iron ore from Malaya amount to about 1,000,000 tons a year. The deposits at Yampi Sound have remained untouched for thousands of years, and although efforts were made to obtain British capital to develop them, it was only when Japanese capital was made available that their exploitation was undertaken. I emphasize that, although Japanese capital would have been expended to develop the deposits, no Japanese labour could have been employed. The arrangement between H. A. Brassert and Company Limited and the Nippon Mining Company to provide £300,000 was somewhat similar to an agreement entered into for the development of some deposits of crystollite asbestos in Western Australia. This material, which is difficult to mine, is useful for making clothes for firemen, drop scenes for theatres, and other purposes where a fire-resisting material is required. Mr. Fenton, a manufacturer of asbestos clothing in England, visited Western Australia where he found a man trying to develop a small asbestos deposit. Mr. Fenton told him that without machinery success was impossible, and offered to supply a plant from England. An arrangement that half the value of the . product of the mine from time to time should be applied to meet the cost of the plant was entered into. The arrangement entered into for the development of the iron ore deposits at Yampi Sound was similar, although on a larger scale. I cannot understand the Government's sudden change of attitude.

Its decision will seriously affect the development of the north-west portion -of the continent. All honorable members will agree that the peopling of that part of Australia is of vital importance. Here was an opportunity for the employment of 200 or 300 Australian workmen directly in the production of iron ore, but no one could say what other developments might have taken place had the work been proceeded with. I have been to Yampi Sound, and I realize something of its possibilities. In addition to great deposits of iron ore, there is a magnificent harbour. Moreover, it is claimed that in the vicinity there is not only copper, but also coal and gold. The Government's decision was made despite the fact that it did not know of any other company willing to undertake the development of these deposits. It arbitrarily decided that the works should be closed down, regardless of the consequences to Western Australia. The Premier of Western* Australia, speaking in the State legislature, recently said -

The figures I shall quote are based on the export of only 1,000,000 tons of iron ore per annum for fifteen years, which was the latest proposition submitted by the company, supported by the State Government, but rejected by tho Commonwealth Government. The amount of royalty lost will be £250,000. Wages lost, which would .have been paid to Western Australian workers, reckoning 200 men at an average of £6 10s. a week, approximate £1.000,000.

The decision of the Commonwealth Government will result in heavy losses to Western Australia. I should like to know what induced the Government to take this action, and, particularly, the reason for keeping secret the reports of the Government Geologist. Why were not his reports tabled in Parliament, as I repeatedly requested? It is true that some short reports, dealing, for the most part, with generalities, have been made available, but no full report has been released. Dr. Woolnough may be a good lecturer on geology, but I do not regard him as an authority on mining engineering. His report contradicted a report by Mr. Montgomery, one of Australia's most eminent rnining engineers.


Mr Forde - Dr. Woolnough has a wonderful reputation among geologists.


Mr GREGORY - Yes, as a geologist, but not as a mining engineer. Moreover,

Mr. Montgomery'sreport on Yampi Sound was made only after a personal investigation on the site, whereas Dr. Woolnough's report was made before he had visited the islands. In a full report Mr. Montgomery estimated the quantity of iron ore above high-water level in the two islands at 97-,300,000 tons, whereas Dr. Woolnough reported -

The Yampi Sound deposits have been variously estimated to contain from 63,000,000 to about 00,000,000 tons of ore. These estimates, however, assume a depth of profitable mining which is almost certainly excessive in existing economic conditions in Australia. 1 do not know whether Dr. Woolnough was responsible for the statement that the ore "below high-water level could not be economically worked. Whoever made it, the statement is preposterous. At Bell Island, in Newfoundland, mining operations are carried out below the sea for 2 miles. There has been no estimate of the quantity of iron ore below high-water level at Yampi Sound. In any case, Dr. Woolnough'* report is> vague. He stated -

In South Australia, the only major accessible deposits arc those of the Iron Knob group. Official estimates of tonnages available lie between 150,000,000 and 200,000,000 tons. These deposits do and must unquestionably constitute the backbone of the Australian iron industry for a long time to come. Unfortunately, the largest deposits of the group show an increasing percentage of manganese, to more than the admissible limit, with increasing depth of exploitation. This must be' counteracted by dilution of the ore with other, iron ore low in manganese, since the manganese cannot effectively be removed in smelting.

I understand that the Broken Hill Proprietary Company Limited has exported iron ore of low manganese content to Japan, and iron ore of high manganese content to America.

My chief purpose at the moment is to ascertain, if possible, the reason for the sudden change of Government policy. Dr. Woolnough based his report on the reports of various State geologists, and he furnished it in very quick time, without having made any personal examination of the areas to which he referred.


Mr Drakeford - Perhaps Hitler had something to do with it!


Mr GREGORY - If we approve of regulations of this description, Hitler may later have a good deal more to do with such things. A report from the

League of Nations, which Sir George Pearce referred to in the Senate some time ago, mentioned the extreme danger of action such as the Government took on this occasion. At present these islands are useless to Australia. Had they been developed they might, in certain circumstances, have become a very valuable asset. It was proposed that 15,000,000 tons of ore should be taken from the islands. The first suggestion was that 25,000,000 tons should be mined. But I remind the House that an arrangement had been made that if Australia desired to smelt any of the ore it could be supplied with such quantities as it requested. It has been said that the ore cannot be mined below high water level. I entirely disagree with that view. Mr. Montgomery has declared that iron ore exists at Yampi for a great depth below high water level and that it could be mined.

I now direct the attention of honorable members to an article which appears in the Chemical Engineering and Mining Review of the 14th April, 1938, under the heading " Australia's Iron Ore Deposits". The whole article is interesting, but I ask honorable members to give special consideration to the following summary which it gives of the iron ore reserves of the various States: -


Mr Forde - On what information was that report based?


Mr GREGORY - The article contains the following paragraph: -

The most recent comprehensive statement of the iron ore supplies in the Commonwealth appears in the bulletin "Iron Ore", published in 1022 by the Imperial Mineral Resources Bureau. This statement, which appears below, is based on information obtained from geological reports and from other official sources. In some cases it will he noticed that deposits of uneconomic size have been ineluded in the estimates.


Mr Forde - It appears that the estimate is sixteen years old.


Mr GREGORY - That may be so, but as against that I ask honorable members to consider the following statement which is also contained in the article: -

Since the estimate for South Australia was prepared boring and exploration have shown the existence of very much larger tonnages : just recently Dr. L. Keith Ward, government geologist, stated that the supplies of iron ore at Iron Knob were estimated at 200,000,000 tons.

I admit that some of the deposits to which reference is made in the article are not accessible and might be very costly to develop; but some of them are quite accessible. As to the economic handling of the ore, I do not know whether the Government has given any consideration to the probable cost of shipping ore from Yampi Sound to Newcastle under Australian conditions. That would be a costly operation. At present, the freight charge between Sydney and Darwin is £3 a ton, though no doubt if large parcels of iron ore were shipped that rate would be reduced, but freight costs around the tropical north of "Western Australia would be very high. There were good, economic reasons for continuing to develop the deposit at Yampi. I am not very greatly impressed by the statement that Australia could not afford to allow additional quantities of ore to be exported. Statements of that kind are frequently made in respect of various commodities obtainable in different countries. Not so long ago a report was issued to the effect that the export of petrol and crude oils from the United States of America would be prohibited; that was due to the fear that the oil wells would, become exhausted. But nothing has been done in that regard. The limitation of our iron ore deposits is not nearly so serious as some honorable gentlemen have stated.


Mr Gander - 'What is the quality of the iron ore deposits of Tasmania?


Mr GREGORY - I do not know. I know the deposits at Yampi Sound and also those at Iron Knob. I know, also, that an iron ore deposit at Wilga, in Western Australia, is so rich that the blacks used to trade the ore for red ochre.


Mr Nock - But that deposit is in- accessible


Mr GREGORY - I daresay it is at present. It is some distance north-west of Meekatharra.

If the Government wished to obtain authentic information concerning the value and extent of our deposits, why did it not agree to my suggestion that -a geophysical survey should he made of them? It should also have obtained expert opinion as to the probability of working the ore at Yampi Sound below high-water level. 1 do not know whether Dr. Woolnough was responsible for the statement that the ore could not be mined under high-water level, but it was an absurd and monstrous statement foi any one to make.


Mr Gander - Does the honorable member suggest that Dr. Woolnough is not a capable officer?


Mr GREGORY - In certain respects he is a very capable officer; but I do not think highly of his capacity as a mining engineer, and I do not speak without knowledge, for I had a great deal to do with mining engineers in years gone by, having been for over nine years Minister for Mines in Western Australia. I have already reminded honorable members that, at Bell Island, Newfoundland, iron ore is mined for 2 miles under the sea. The iron made from it is sold for a. much lower price than iron is sold for in Australia, to-day.


Mr Mahoney - It might be possible to tunnel the ore as coal is tunnelled.


Mr GREGORY - I am afraid I cannot deal with that intricate subject in reply to questions. As far back as 1926-27, the Bruce-Page Government brought British specialists to Australia to make geophysical surveys in various parts of the country. At that time, an amount of £32,000 was expended in such work. One result of it is the development of the Captain's Flat mine, not far from Canberra. The present Treasurer (Mr. Casey) introduced a bill into this Parliament not very long ago which provided for the making of geological and geophysical surveys of certain parts of North Queensland, Western Australia and the Northern Territory. Parliament passed the bill, and an amount of £180,000 was expended under its pro visions, but, so far as I know, there is very little to show for it. [Quorum formed.] The introduction and passing of that bill showed that the Government and the Parliament had considerable confidence in geophysical survey work.

I ask now that arrangements be made for a thorough geophysical examination of the iron ore deposits of Australia to ascertain their probable extent and quality, so that 1,Ve may have reliable and up-to-date information on the real position of Australia in respect of iron ore reserves. If a geophysical survey had been made we should have been enabled, within a couple of months, to ascertain the extent and tonnage of these deposits. Some honorable members seem to be inclined to treat this matter lightly, but developments in geophysics during the last century in Sweden, and Germany,' and more recently in Russia and the United States of America, prove that geophysical surveys offer a means of estimating fairly accurately the tonnage of dense bodies of ore. When I advocated the adoption of this method the Treasurer replied to me by letter stating that geophysical methods would not enable us to arrive at the value of the ore. The value of the ore was beside the point. The Government's advisers estimate the quantity of ore available at Koolan Island and Cockatoo Island at from 60,000,000 to 90,000,000 tons. That is the available ore above high water level, but it is quite possible that treble that tonnage could be profitably won below high water level.







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