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Wednesday, 8 December 1965

Mr COLLARD (Kalgoorlie) .- The purpose of one of the Bills before the House is to amend the Pyrites Bounty Act 1960, which was amended earlier this year by Act No. 37 of 1965. The 1960 Act provided a bounty period commencing on 1st January 1961 and expiring on the last day of June this year. The Government therefore brought down a small amending Bill prior to that date. The Bill, which was passed by the Parliament, extended the bounty period for six months from the first day of July until the last day of December this year. The Bill with which we are now dealing will amend the Act further by extending the bounty period to the last day of June 1969, that is, for a period of three and a half years. This period is the term recommended by the Tariff Board. Of course, the period can be extended if there is need to do so when it expires. If necessary the action could be taken well before then, if the demand for the sulphur bearing material is still there. To my mind, the three and a half years term is not excessive. I believe that it certainly should not be any less than that if it is to meet the requirements of the mining companies which are producing sulphur bearing material. I shall say a few more words on that score a little later.

We must keep in mind that the Government of Australia is under some obligation to certain producers of sulphuric acid and sulphur bearing material for the part that they played in that production when supplies of brimstone were difficult to obtain from overseas. We cannot be sure that a similar position will not come about at some time in the not too distant future. For that reason alone I feel that we should, while it is possible to do so, and within reason, of course, ensure that the sulphur acid production plants and the sulphur material production mines are kept in operation. From 1958 up to and including June 1964 more than 1,300,000 tons of sulphur was imported by Australia, mainly from Mexico and the United States of America. Since 1958 the largest amount was imported during 1963-64 when more than 304,000 tons was brought in. In that same year we produced in Australia about 109,000 tons of pyrites. That met only about a quarter of our requirements. However, I suggest that the amount we are producing at this stage is not the all important factor. What is important is that we have the sulphur bearing material available in case our overseas sources fail or become in short supply while there is still an urgent demand for sulphur in Australia.

In 1950, as the honorable member for Braddon (Mr. Davies) has said, there was a world shortage of sulphur which would have meant a shortage of sulphuric acid in this country and, in turn, a serious shortage of superphosphate for our primary industries. This position caused the Government of the time some serious concern. In primary industry, as honorable members are aware, the prime purpose of the use of sulphuric acid is to break down phosphate .rock into superphosphate. Any shortage of superphosphate, because of a shortage of sulphuric acid, would mean a serious retardation of our primary production. Because of the great value of our primary industries in relation to overseas earnings the Government at that time thought it wise and necessary to encourage the mining of pyrites in Australia.

I think I am correct in saying that it was during the life of the Chifley Government that negotiations took place between the Government and companies which were producing or could produce sulphuric acid from the pyrites and also the companies which at the time were producing pyrites. The purpose of the negotiations was to arrive at an arrangement whereby the companies could be assisted to extract sulphur or produce pyrites, as the case may be, and also to ensure their protection against overseas companies or interests which could, when supplies became more freely available, supply the Australian requirements more cheaply than could be done with the materials produced and processed in Australia. The principle behind the idea was that the people who were prepared to install plants to extract sulphur from pyrites or to develop mines to produce the material when the supply was short and the demand was urgent should not be cast aside and forgotten if there should subsequently be a plentiful supply from elsewhere of the sulphur bearing material and the acid. There was a fair enough proposition, and the present Government continued that policy after it came into office. The bounty is still paid to acid producers as an encouragement to use Australian produced pyrites. The Bill to which I wish to refer relates mainly to assistance given to the industry which is producing pyrites, or sulphur-bearing material. It must be borne in mind that the mines from which pyrites is obtained cannot be turned on and off like a tap. If they are forced to close, most of them will remain closed. In most cases, it would cost more to re-open them when the demand for their product is once again with us than it would cost to continue paying the bounty for several years.

The total amount paid out in bounties during the year ended June 1964 was £644,275. This was divided amongst five producing companies. Gold Mines of Kalgoorlie (Aust.) Ltd. - which, incidentally, produces gold mainly and pyrites only as a sideline- received a bounty of £48,539. The Mount Lyell Mining and Railway Co. Ltd., which produces copper mainly, received £177,463. Nairne Pyrites Pty. Ltd., which produces pyrites exclusively, received £207,973. Mount Morgan Ltd., which is also mainly a copper producer, received £109,707, and Norseman Gold Mines No Liability, which is exclusively a pyrites producer, received £100,593. Even with the sulphuric acid bounty added, the total amount estimated to be payable in the year 1965-66 is only £1,566,000, which is a very small sum compared with the total of £56,108,000 which is paid out in bounties and subsidies generally in Australia.

As I said earlier, the recommendation of the Tariff Board that the payment of the bounty be extended for a further three and a half years could not be considered excessive or beyond what is necessary when the circumstances relating to the mining of pyrites are appreciated. In fact, a mining company which is able to continue only because of the bounty it receives is restricted to quite some extent if it can be sure of only a further three and a half or four years of bounty period. However, generally speaking, a definite term of at least three and a half years will allow a mining company, under normal circumstances of mining, to carry out development work to open up further ore bodies of pyrites. This would not be possible, or at least would be a terrific gamble, if the term of the bounty was for some snorter period. It would certainly be a gamble if there was no certainty of continuation of bounty beyond the three and a half years. I am sure that some mining companies would not be prepared to take the gamble and would be more inclined to mine whatever ore was readily available, or simply to carry out only that amount of development work which would be sufficient to keep the mine going until the expiry date for payment of bounties.

I suggest that it must be remembered that, in order to ensure the life of a mine, development work must be kept well ahead of the stoping or ore breaking work, and it is such development work as winzing, rising, cross-cutting and driving which is the most costly part of mining operations. A lot of work has to be done from which no revenue, or very little, is derived. Development work is usually carried out in mullock, and not in the sulphur bearing material. Therefore, in the case of a pyrites mine, not one penny is recovered from the development work to offset its cost.

To open up a new ore body and to get it ready for stoping and the production of sulphur bearing material may take six months or even longer, and this is all dead work for which no remuneration is received. It is quite obvious, therefore, that if a company is working on only a small profit it cannot take the odds as to whether the bounty will continue, particularly if the bounty presently being paid is. to continue for only a short period. Companies must be positive that when the development work is completed, and they reach the stage where they can start producing sulphur bearing material, the bounty will continue to apply while they are actually bringing out the ore.

Further, we should not be concerned only with the mining companies. Very serious consideration must also be given to the welfare of the people who are dependent both directly and indirectly upon the mines. The closure of a mine, even a small one, can have a very serious effect on a whole town. Take as an example a mine employing about 100 men. If it ceases to function, all those men are out of work, and all the members of their families, who might number perhaps 150 or 200, are also seriously affected. One such mine would be Norseman Gold Mines No Liability, which produces pyrites exclusively. Therefore, I am pleased to see that on this occasion the bounty period is to be at least the same as applied from 1960.

There seems no reason why there should not be a similar extension in 1969. As things are at present, if there is any suggestion that the bounty will cease, it is possible that mining companies will concentrate only on rich or readily available ore. This in turn could result in the employees looking elsewhere for security of employment and eventually the mines could face the further difficulty of lack of labour. But as this Bill provides for the payment of the bounty for a further 3i years that position should not arise.

It might be appropriate at this stage to draw attention to the sulphur content of the pyrites being mined in Australia. If, in the not too distant future, we return to a position where there is a shortage of supplies of brimstone from overseas, it will be these mines which will be called upon to increase their production substantially so that sufficient supplies of sulphur will be available for our primary industries. For . the year ended 30th June 1964, Norseman Gold Mines No Liability showed a 48.2 per cent, extraction. Mount Morgan Ltd. achieved an extraction of 50.8 per cent., the highest of the five companies producing pyrites. Nairne Pyrites Ltd. had an extraction of 40.7 per cent. Mount Lyell Mining and Railway Co. Ltd. achieved an extraction of 46.8 per cent, and Gold Mines of Kalgoorlie (Aust.) Ltd. had an extraction rate of 31.6 per cent. As I stated earlier, the production of sulphur concentrates is only a sideline with Gold Mines of Kalgoorlie. It obtains the sulphur concentrates from its gold extraction process. It produced only 7,938 tons of sulphur. The average extraction from the total production of 247,828 tons of pyrites by the five companies was 43.9 per cent.

Anyone who has had any experience of mining pyrites will agree that those are very good extraction figures and that they indicate how very valuable these producers will be if, at some later stage, there should be a shortage of supplies from overseas. Some might suggest that the mines to which I have referred should cease operations at times when there are plentiful supplies of sulphur-bearing material available so that much more of the local product will be available in times of shortage.

Mr Pollard - That would be a shameful suggestion.

Mr COLLARD - Someone may suggest it, so I am supplying the answer beforehand. While such a suggestion may sound all right, unfortunately one cannot turn the mines on and off at will. If they were to cease production they would soon become unsafe and unworkable. Consequently when local supplies were desperately needed it would not be possible to bring the mines back to their stage of production at the time they ceased operations and therefore the additional material would be lost. For that reason it is wise to keep them operating while it is possible to do so. It would be most unwise to adopt a different attitude. We must also have regard to the treatment plants which would not last any time at all once they ceased operating. The corrosive effect would soon ruin these plants.

Because we could at some time be faced with a shortage from overseas the users of sulphuric acid should be obliged to use a percentage of the local product to ensure that the producers of pyrites can continue to operate. There is some obligation on the superphosphate companies, just as there is on the Government, to keep pyrites producers in business. It has been suggested that at some future time neither brimstone nor pyrites will be required and that sulphuric acid may be displaced by something equally as good and more readily available. If and when that happens we will be in a completely different position. We will not have worries about a possible shortage of brimstone or other sulphur bearing materials, but until it does happen, and until we can be quite certain that sulphur or sulphur bearing material is not required, we must ensure that the existing avenues for obtaining sulphur are kept open, and those producing pyrites should be assisted by the payment of the bounty.

It may be thought that the average receipt of something less than £129,000 annually by the pyrites producing companies does not play a big part in keeping the mines in production, but it would be wrong to arrive at such a conclusion, because that bounty is of considerable benefit. During 1963-64 the five companies concerned received £644,275 paid on 247,828 tons of pyrites from which 108,932 tons of sulphur was extracted. This means that they received about £2 12s. a ton of pyrites producednot on every ton of ore produced, but on every ton of pyrites after the milling process. This has been of considerable assistance. It could easily mean the difference between a mine continuing to operate and its closing down. Both Norseman and Nairne are dependent entirely on the pro duction of pyrites and, as the Tariff Board report points out, there is little if any alternative employment in those places if the mines should cease production. This is an important factor. The removal of the bounty would result in an increase in costs to those companies mining gold or copper with pyrites as a sideline. This, in turn, would affect employment, particularly of those engaged on the pyrites production side of the operations. About 4,000 men are directly involved and many more are indirectly concerned. This factor must surely be considered. Just because a mine is producing pyrites as a side issue it should not be overlooked that sulphur concentrates can bring in some revenue whereby the overall production costs of the mine are reduced. Gold Mines of Kalgoorlie receives considerable' assistance under the Gold-Mining Industry Assistance Act. Its production costs are above £13 10s. an ounce of gold recovered and gold is bringing only £15 12s. 6d. an ounce. By selling sulphur concentrates the company can recover about £50,000 per annum and this may be sufficient to enable the mine to keep operating and show some reasonable profit.

We hear a lot about decentralisation and about setting up industries outside metropolitan areas. Mining is a ready-made industry for decentralisation. In almost every instance mines are located in outback areas and they attract employees. If mines are closed down and there are no other local employment avenues the mining towns become ghost towns. On the score of decentralisation alone- the need to extend our population beyond the boundaries of cities - the expenditure of £500,000 a year, much of which is returned to the Treasury in taxes, is not much to pay to help achieve an objective about which so many talk but upon which so few take any action. If there were no use for pyrites or sulphur the position would be entirely different but at present, and for some time to come, I am sure there will be a heavy demand for these materials, and where we can recover the local product at a reasonable price we should continue to do so.

I notice in the Tariff Board's report a recommendation that the bounties be reviewed at least 12 months prior to their expiration. I hope this recommendation is adopted so that mining companies and their employees will have ample warning should it ever be found no longer necessary to continue the production of pyrites or the use of sulphuric acid. I support the Bill.

Debate (on motion by Mr. Gray) adjourned.

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