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Thursday, 9 December 1965


Mr GRAY (Capricornia) .- I propose to discuss the effect of this legislation on central Queensland and particularly Mount Morgan. I point out that the continuation of the bounty is essential not only for the immediate benefit of the particular community but also for the expansion of industry in the area. At the present time a fertiliser factory is in process of being established at Gladstone. This factory will be dependent on pyrites from Mount Morgan and the bounty is essential to the continued supply of this material.

The fertilizer complex, projected to come into production in Gladstone late in 1967, has been based on the production of 160,000 tons a year of sulphuric acid by Mount Morgan Limited from Mount Morgan pyrites. This quantity of acid will require approximately 140,000 tons a year of pyrites from Mount Morgan. Because of the higher capital cost of an acid plant to use pyrites it is essential that the bounties on pyrites and sulphuric acid be available to the company to justify the use of pyrites in place of brimstone. If there are no bounties on pyrites and sulphuric acid it seems likely that brimstone will have to be used and that the major part of the sulphuric acid plant and the fertilizer complex may not be located in Queensland.

The estimated capital cost of a sulphuric acid plant using pyrites to produce 500 tons a day of acid is £2,200,000. This compares unfavourably with the estimated capital cost of £900,000 for an acid plant of the same size designed to use imported brimstone. Acid produced in a pyrites burning plant can compete with acid from a brimstone burning plant only if bounties equal to the existing bounties on pyrites and sulphuric acid are available to the producer of pyrites and the acid manufacturer.

The Mount Morgan ore-body consists of minerals which contain gold, copper, silver and sulphur. The sale, for small return, of the pyrites is necessary and desirable to enable the full exploitation of the ore-body. The proven reserves of gold and copper ore are limited and without the sale of the pyrites content of the ore operations on the Mount Morgan ore-body could start to decline within the next 20 years. On the other hand a steady outlet for the 9,000,000 tons of pyrites available at Mount Morgan would increase employment at the mine and ensure the continuing operations at Mount Morgan for at least 50 years.

The two customers that the company had for pyrites have recently advised that they no longer require pyrites. Their reason for this is presumed to be uncertainty about the future of the pyrites and pyritic acid bounties and the disadvantages of using pyrites to produce acid if there are no bounties. In the past the company has received an extremely low return on the funds used in the manufacture of pyrites. The position for the last financial year, ended 27 June 1965, as shown in statements submitted to the Tariff Board, was as follows -

 

It can be seen from these figures that the profit before tax of 3.54 per cent on funds is well below the limit under the Act of 12£ per cent, and that the bounty has not been a means of making large profits but in fact has been necessary to enable pyrites to be sold and used for the manufacture of sulphuric acid.

In addition to the labour directly required to produce pyrites at Mount Morgan for the fertilizer plant at Gladstone, revenue would be obtained by the Railway Department from the freight on 140,000 tons a year of pyrites transported from Mount Morgan to Gladstone. This would be of great benefit to the Railway Department in central Queensland in that it would enable more effective use of the line between Mount Morgan and Rockhampton after Moura coal is lost to this section. It would also help to prevent the loss of railway employees from Mount Morgan and go a long way towards ensuring that Mount Morgan will retain its railway depot

The use of Mount Morgan pyrites would result in a saving of £1,160,000 a year in foreign exchange and result in the development of a strategically important sulphuric acid centre at Gladstone based on an indigenous raw material. The saving of £1,160,000 of foreign exchange is based on the current imported price of brimstone. The price of brimstone has increased rapidly during the last year and it is likely, according to informed sources overseas that it will go substantially higher. This will mean a corresponding increase in saving of expenditure on imports of brimstone. In addition informed forecasters predict that there will be another world shortage of sulphur by 1970. This means that by that time the Australian Government may very well be forced to reconsider its attitude towards encouraging the use of indigenous sources of sulphur as it had to do in the early 1950's. This appears to be the most likely outcome of the present rapidly changing sulphur supply position and Australia will find itself in the position of having to pay high prices for imported sulphur of limited availability. For this reason alone it would appear that Australia should not become even more dependent on overseas brimstone as a result of failure to continue the bounty on pyrites.

Further increases in the price of brimstone which seem inevitable will in turn result in increases in the cost of fertilisers based on sulphuric acid and in turn increases in the cost of primary products. On past experience the Government will be called upon to provide further bounties on fertilisers produced from imported brimstone. The major part of these bounty payments will be used indirectly to pay for high priced brimstone and will be lost to the country. On the other hand a continuation of the bounty on pyrites will result in the money being used to increase employment in Australia and it will be more likely to stay in Australia. Also whereas the bounty paid on fertilisers will most likely increase with increasing cost of brimstone, the bounty payments on pyrites will decrease with increasing brimstone prices and eventually fall away to nothing. The continuation of the bounty on pyrites will have a stabilising effect on the cost of fertilisers to primary producers whereas its removal will probably result in higher bounty payments on fertilisers being called for before 1970.

Because of the availability of such large quantities of sulphur in pyrites at Mount Morgan it will be possible for Queensland, at least, to continue to enjoy low cost fertilisers and low cost primary products provided that the bounties on pyrites and acid are continued. There is no possibility that the cost of production of pyrites will increase at anything like the rate at which the cost of brimstone has been increasing in the past year. The availability of cheaper fertiliser should encourage primary production in central Queensland and allow smaller holdings to be worked economi cally in this area. This in turn will contribute to closer settlement of the area. Again this will provide increased traffic of primary products through the ports of Rockhampton and Gladstone and an inevitable increase in export income.

To summarise the position, the economic feasibility of the fertiliser project based on the use of pyritic acid is fundamentally dependent on our ability to offer pyritic acid at a price which is competitive with that of acid produced from brimstone. In order to do this we need the assistance of a bounty on pyrites and pyritic acid. The fact that the continuation of the bounty on pyrites will increase the life of Mount Morgan from 20 to 50 years is very important at a time when we are trying to develop the northern portion of this continent. Here we have one measure that can guarantee the existence of both the town and the mine at Mount Morgan. It will guarantee to every person at present employed at the mine work for the rest of his working life if he wishes to remain at Mount Morgan. It is expected that the pyrites deposit there may expire in 50 years. However, it is also expected that if the bounty is not continued the mine, the township and the entire community will disintegrate in 20 years.

We should not overlook the possibility that the production of sulphur and sulphuric acid from pyrites mined in Australia will relieve the Government of a drain of more than £1 million a year in foreign exchange. So, Mr. Speaker, we urge that this Parliament continue the bounty on pyrites to preserve not only an important industry in central Queensland but also industries conducted in similar circumstances in other parts of Australia. This bounty has a major aim of preserving an indigenous industry and there should be no question of its not being continued. I urge members of all parties in this Parliament to join in supporting the two Bills that we are now discussing.







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