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Wednesday, 8 December 1965


Mr DAVIES (Braddon) .- The Pyrites Bounty Bill (No. 2) 1965 is supported by the Opposition. It is proposed by this Bill to extend the period of the operation of the Pyrites Bounty Act for a further four years until 30th June 1969. The bounty, as indicated by the honorable member for Yarra (Dr. J. F. Cairns), is at the rate of £3 a ton on sulphur contained in pyrites. This basic rate is increased or decreased by the same amount as the landed duty on sulphur falls below or rises above the price of £16 a ton. It is interesting to note that this rise and fall occurs because of the disabilities of pyrites producers with regard to the cost of imported sulphur. As the honorable member for Yarra and I have indicated, the Opposition supports the Bill.

Pyrites in this country is produced by five companies. Since the last reference to the Tariff Board one company has gone out of operation. This was the Lake George Mines Pty. Ltd. in New South Wales. The five companies producing pyrites in Australia are the Norseman Gold Mines No Liability and Gold Mines of Kalgoorlie (Aus.) Limited in Western Australia, Nairne Pyrites Pty. Limited in South Australia, the Mount Lyell Mining and Railway Company Limited in Tasmania and Mount Morgan Limited in Queensland. Norseman and Nairne are wholly dependent on the mining of pyrites which forms the whole of their operations. In the case of the other companies, the mining of pyrites is a byproduct, and a valuable one at that. G.M.K. of course produces gold and the mines of Mount Morgan and Mount Lyell produce mainly copper. Only a portion of the pyrites produced by G.M.K. is railed to acid works at Fremantle. No sulphur is obtained from the remainder of its output, which is processed at Kalgoorlie to extract gold. I know that the honorable member for Kalgoorlie (Mr. Collard) will have an interesting and valuable contribution to make on this subject.

Pyrites from Norseman is used in acid production by Cresco Fertilisers (W.A.) Pty. Ltd. at Bayswater and by CSBP and Farmers Ltd. at Bassendean, both in Western Australia. We heard from the honorable member for Angas (Mr. Giles) a few moments ago of the output at Nairne, which is used by the Sulphuric Acid Pty. Limited to produce acid at North Birkenhead in South Australia. I thought (hut the honorable member for Angas was a little pessimistic in his hopes and ambitions for the pyrites industry in this country when he said that the manufacture of acid would be in time wholly and solely produced from imported brimstone. I think the people at Nairne and Norseman, whose townships and mining operations depend completely on the mining of pyrites, would be indeed sorry to see that day come. Pyrites from Mount Lyell is treated at the acid plants of Imperial Chemical Industries of Australia and New Zealand Limited at Yarraville in Victoria. I will have something to say about the financial connection between Mount Lyell and these fertiliser works - it dates back to 1904 - which were eventually taken over by Boral and are now operated by I.C.I.A.N.Z.

Mount Morgan currently supplies two acid producers with pyrites. These are the Sulphide Corporation at Cockle Creek in New South Wales and ACF and Shirleys at Pinkenba at Brisbane in Queensland. Here again 1 am sorry to note, from the point of view of the national development, the use of indigenous materials and the need to conserve our overseas balance of payments position, that Mount Morgan Limited, ACF and Shirley announced its intention to produce with wholly imported brimstone after June 1965. The production of pyrites by these three companies has been mentioned by the honorable member for Yarra. In 1961-62, 184,023 tons were produced while the last recorded figures, which are for 1963-64, show 229,782 tons of pyrites produced in that year. If honorable members look at the table on page 6 of the Tariff Board's report on Sulphuric Acid and Pyrites Bounty Acts they will find that the sulphur content of pyrites, for instance, at

Mount Lyell on the west coast of Tasmania, stands at 49.5 per cent. That figure represents the sulphur content of pyrites in tons and the table sets out a comparison between this figure relating to brimstone and other mineral deposits throughout Australia. If honorable members look at the figures they will find that approximately 50 per cent, of the tons of pyrites that are mined and supplied to acid manufacturers contain sulphur.

This report, as the honorable member for Angas indicated, contains a mine of information. It is a pity that some of the confidential information supplied to the Tariff Board is not available to members of this Parliament. Some of us are in a position to obtain this, information from companies in our own electorates, but it would be far better if some of the information was supplied in the reports of the Tariff Board or if it was made available to members generally. The Tariff Board reports that from the information supplied by the pyrites producers it appears that the total Australian output could be raised by 50 per cent, without increasing current capacity. That is correct. I feel sure that we could produce more and that we could increase our current output by more than 50 per cent, without additional costs, particularly in view of the great development that is taking place at the Renison Bell tin mine on the west coast of Tasmania. Let me briefly mention here that this mine has been taken over by Consolidated Goldfields of Australia in one of the takeover deals that I will refer to later. Whereas previously the mine produced a few hundred tons of ore a day, after the completion of the £2.5 million expansion contract which is now being proceeded with the mine will increase this figure to 3,000 tons of ore a day. From 3,000 tons of ore will come 1,500 tons of pyrites, and from 1,500 tons of pyrites, working on the basis of 50 per cent, sulphur, there will be 750 tons of elemental sulphur. Using for production purposes a figure of only 300 producing days a year, and with £15 a ton the price of elemental sulphur, as it is at present, it is found that the Renison mine alone when in full production can save this country £3 million annually for imported sulphur. The Mount Lyell Mining Company could easily produce 100,000 tons of pyrites a year. Working on the same proportion of 50 per cent, of sulphur, this production would yield another 50,000 tons of elemental sulphur.

So the Tariff Board is quite correct when it says there is no doubt that the total Australian output could be raised by 50 per cent, without increasing current capacity. I have already told the House about the great mining boom that is taking place on the western coast of Tasmania, particularly at Renison, and of the vast increase in the output of ore. As I have said, we will have a production of 1,500 tons of pyrites every day at Renison and it is a pity to think that this may be washed down one of the streams or simply stockpiled somewhere so that it will be out of the way, while we are forced into the position of using increasing quantities of imported brimstone.

The Tariff Board was told about this possibility of increasing the use of pyrites. It was told that in the event of the pyrites mines having to cease operations it would not be possible to moth-ball plant and equipment, owing to the rapid rate of corrosion which would ensue. Mount Lyell stated that it would prove expensive to stockpile its pyrites at the mine since the heavy rainfall which prevails in that region would wash much of it away. One can imagine what would happen, in an area in which the rainfall is between 120 and 150 inches a year, to a stockpile of pyrites left in the open. The Tariff Board said in its report -

The five pyrites producers employ about 3,800 persons, of whom at least 350 are directly engaged in mining and processing pyrites. More than 33,000 people live in towns directly dependent upon the mines.

The honorable member for Yarra posed the question how many of these people would be thrown out of employment if Australia went over entirely to producing acid from brimstone. This is possibly not the right way to look at the problem. It is not so much a question of how many would be displaced; it is more a question of the amount of bounty the company attracts with its by-product, and of considering that in the overall financial returns from mining operations. Some of these mines have benefited to a great extent from the bounty. I think I know what would have happened in the past if the Mount Lyell company had not had the benefit of the bounty and when on some occasions it finished up its mining operations in the red. On those occasions it was only because of the bounty that the company was able to break even and on some occasions to show a small profit.

I think the answer to the question asked by the honorable member for Yarra is this: If it were not for this little amount that a company gets from its by-products, it would not be long before some of the shareholders would begin to wonder whether the mining operations of the company as a whole were an economic proposition. I do not believe that it would be a matter of thinking along the lines: " We will close down our pyrites production "; it is more a question of looking at the whole overall financial operations of the company for a year, and when that is done the money derived from the bounty on by-products like pyrites becomes increasingly important. It is with this in view that 1 have put forward a case for Mount Lyell. I personally, and the Opposition as a whole, have supported these bounties for a number of years, and I sincerely hope, for reasons that I shall outline in a few minutes, that this bounty will continue for many years to come.

Brief mention has been made of the history of the Government's attitude to the use of pyrites in the manufacture of acid. It is correct, of course, that the companies concerned were encouraged to expand their operations during the Second World War, and they engaged in a great deal of capital expenditure for that purpose. The Government's departmental officers went around to the various mining fields at that time, interviewing managers and directors and practically begging them to do everything possible to use pyrites for the production of acid. One can readily imagine how shipping was being subjected to enemy attack at the time, and we can understand why the Government wanted to retain a process for the manufacture of acid from a locally produced material. If we are forced into a position in which we are entirely dependent upon imported brimstone it will be a sorry situation indeed, particularly if we disregard, in the meantime, all our supplies of pyrites and all our pyrites machinery.

The Government encouraged companies at that time to continue their production of pyrites because of the tremendous importance of sulphuric acid. It is the basis of the manufacture of superphosphate, and we know of the tremendous value of that material to primary industry, which is our major export income earner. Every industrial concern of any note uses sulphuric acid at some time in its operations. There would be hardly an article in this chamber, for instance, that has not come into contact with sulphuric acid at some time during the process of manufacture. These mining organisations were encouraged during the Second World War to expand their pyrites operations so that we would not be entirely dependent on overseas supplies.

In 1950 there was a very grave world shortage of sulphur, and again the Australian Government asked producers to expand their operations, using local pyrites. The process in which pyrites is used is a very costly operation compared with the one in which imported brimstone is used. The honorable member for Angas has pointed out one or two of the disadvantages of using pyrites. There is, of course, a very heavy freight charge, because 50 per cent, of the product is of no value. In Tasmania the material has to be taken from the mine, separated in the concentrate process and then taken 26 miles by truck to Strahan. It is shipped from the west coast of Tasmania to Melbourne. Here we are taking a product in bulk and 50 per cent, of it is of no value. In the acid plant the iron oxide has to be separated from the elemental sulphur. As I have said, we are transporting 50 per cent, of iron oxide that is of no value at all. It is the elemental surphur that we have to extract.

I was very interested to hear the views of Professor Hunter of the University of Sydney who, before the Tariff Board, directed attention to this very feature. He suggested that the Government should investigate ways and means of separating the elemental sulphur from the iron oxide at the place of production of the pyrites. If this separation could take place at the scene of mining operations we would save a tremendous amount in freight costs. This would be all to the good. I hope that the Government, through the Bureau of Mineral Resources and the various other agencies that it has at its command, will take action on the submission made by Professor

Hunter and conduct investigations into the possibility of breaking up the iron sulphide, or pyrites, as we know it, into the two components - iron oxide and elemental sulphur - at the site of the mine.

In asking the producers to expand their production of pyrites, we must bear in mind that acid producers will require larger plants than are required for the manufacture of sulphuric acid from brimstone. Time will not permit me to go into the process in detail, Mr. Deputy Speaker. With a larger plant a great deal of extra maintenance is needed on the plant itself. Furthermore, gas obtained from iron pyrites has to be cleaned to a much greater extent than gas obtained from a brimstone burning plant. When H.SO4, or sulphuric acid, is produced from elemental sulphur obtained from pyrites there is a certain amount of sludge in it and this has to be cleaned out, whereas the acid produced from imported brimstone is fairly clean. All these additional costs make it much more expensive to manufacture sulphuric acid from pyrites.

The Government recognised all this in 1950 as it had been recognised during the Second World War. When there was a shortage of sulphur in 1950, the Government saw the purpose of using the local product, despite all the disadvantages. It appealed to producers of sulphuric acid to increase their use of the local pyrites and gave an undertaking to help them. It promised this assistance by way of bounty and the sulphuric acid bounty came into operation for the first time in 1954 under the terms of the Sulphuric Acid Bounty Act of that year. A change came over the scene during the 1950's because more deposits of brimstone were found overseas and the price of the imported commodity fell. This is reflected in the import figures, Mr. Deputy Speaker. The Statistical Service of the Parliamentary Library has kindly prepared for me statistics showing the total value of imports of sulphur into Australiain recent years. These indicate a tremendous rise in imports. The Service has also kindly prepared figures showing imports of sulphur by weight from the United States of America, Mexico and Canada, With the concurrence of honorable members, I incorporate the two tables in " Hansard ".

 

The figures show that a very interesting development has taken place. We have no figures for imports from Canada until 1961- 62, when we imported 1,502 tons of sulphur from that country. Imports from Canada rose dramatically from 21,218 tons in 1962- 63, to 47,523 tons in 1963-64 and to 175,754 tons in 1964-65. We also import a considerable volume from Mexico and the United States. In 1964-65 we imported sulphur to a total value of £3,239,000. These imports represent a drain on our overseas reserves.

The high price of Australian production based on local pyrites brought about a change in the Government's policy and it is now of the opinion that we should use imported brimstone. The Tariff Board, in its report, admits that there is an obligation to local manufacturers who, during the

Second World War and in the early 1950s when there was a shortage of sulphur went to a great deal of expense in installing plant and undertaking work in order to carry out the Government's wishes and ensure that we would have adequate supplies of sulphuric acid in Australia in the event of any international disturbance. The local producers changed over to imported brimstone. A.C.F. and Shirleys Fertilisers Ltd. in Queensland, as I indicated earlier, will be using imported brimstone entirely after June of this year. Imperial Chemical Industries of Australia and New Zealand Ltd. in 1964 undertook tremendous expansion of its plant, based on the use of imported brimstone. Today we have only five pyritic acid plants in Australia apart from the I.CLA.N.Z. factory in Victoria that I have mentioned. The operators of these plants have stated that they can change them to brimstone plants at a small cost of some £20,000. As the Tariff Board declared, it is up to these manufacturers to say whether they propose to change from the use of pyrites to the use of brimstone.

I believe that the policy that has been adopted by the Government is wrong. Reports from producers of elemental sulphur overseas have indicated in recent weeks that there is concern about the extent of the deposits available to them, although no definite information is at hand yet. Despite the huge imports of sulphur from overseas, in recent weeks there have been suggestions that deposits of elemental sulphur available overseas may not be sufficient to maintain Australian imports of this magnitude. So I consider that the Government and the Tariff Board, and particularly the manufacturers who are changing so rapidly to the use of imported brimstone, should consider the matter again as quickly as possible. It would be a terrible thing for Australia if we found that our supplies of sulphur were cut off by some international disturbance and we had to revert to using pyrites. We would not be able to make the change at short notice and the Government should never allow us to get into such a situation.

The danger to the sulphuric acid industry was taken into account by the Tariff Board in conjunction with evidence submitted by the five mining companies and the acid manufacturers at the Board's last inquiry.

Evidence was given concerning the various problems that are foreseen, particularly if imported sulphur should be used entirely. The mining companies submitted four main reasons for the continued use of local pyrites. It was agreed that sulphur is a mineral of strategic importance and of great value, particularly in time of emergency when overseas supplies may be cut off. As I have stated, if this were to happen wc could not revert at short notice to the manufacture of sulphuric acid from pyrites, ft is important, even if for no reason other than defence needs, that we maintain our local industry. The local manufacturers also directed attention to the considerable savings in foreign exchange that could be effected by the use of sulphur from indigenous sources. As I have stated, we are importing annually sulphur worth £3,239,000 at a time when there is no need for such a large volume of imports of this commodity.

Mr. Deputy Speaker,I am especially interested in the position of the Mount Lyell Mining and Railway Co. Ltd. at Mount Lyell on the west coast of Tasmania. This company's mine has been in operation for 70 years. It operates on the lowest grade ore in the world. It. is an extremely efficient mine. This has been recognised by mining experts all over the world. Some 7,000 people are directly or indirectly concerned or connected with the mine and interested economically in its well-being. Back in 1905, to find an outlet for pyrites, it started a chemical works in Victoria for the manufacture of fertiliser. During the next 30 years we sent about 150,000 tons to that works and in 1934 we changed from pyrites to pyritic concentrate. This was a byproduct of the concentration plant. In the last 30 years we have shipped to Melbourne 1,400,000 tons for processing.

This connection of Mount Lyell with chemical works no longer exists, due to a series of take-overs. Now the people who control the fertiliser works are in a position to dictate the quantities they will take from Mount Lyell. The quantities they take depend almost entirely on whether the bounty is to be continued. It is for that reason that I strongly support the continuation of the bounty. Over the past 70 years some great subsidiaries have been built up. There were the chemical works and metal industries and then, a few years ago, the financial operations of the company were split into two groups. We had the mining operation of the Mount Lyell Mining and Railway Company and also Mount Lyell Investments. This breaking up, I feel, weakened the position of the company and made it easier for take-overs. In came Patino and offered to take over. That company was unsuccessful because Boral outbid it. Later, Consolidated Gold Fields (Aust.) Pty. Ltd. took over from Boral. Because of the separation into two groups and because the mining operations were set out on their own, it became increasingly important to look for all sorts of means to obtain additional revenue to incorporate in the financial balance sheet of the company. So pyrites has often helped us over difficult times when the price of copper has not been as high as it is today. Pyrites has often helped us to keep open the mine and to provide employment.

As I said earlier, I will be very pleased if the bounty is continued for many years to come because the life of the open cut mine is expected to be another eight or nine years. It has been proved that under the open cut there is about 40 million tons of ore. If this deposit is to be operated it must be done economically. It will be a far more expensive operation than open cut mining and it will become more important that the bounty continue because this will add to the returns from the mining operations and enable us to keep afloat. Why should we not use the local indigenous product and so assist our overseas balance of payments position and guard against any disruption to our supplies in case of war. As I have already indicated, we are capable of producing 100,000 tons a year and Renison Bell is capable of producing anything up to 750 tons of sulphur a day, which would provide a saving of £3 million a year to this country.


Mr SPEAKER - Order! The honorable member's time has expired.







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