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Copper: aid to Tasmania for Mt. Lyell



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DEPARTMENT OF BUSINESS AND CONSUMER A F F A IR

COPPER: AID TO TASMANIA FOR MT. LYELL

78/108

(S ta te m e n t by th e Deputy Prim e M in is te r and M in is te r f o r Trade and R eso u rces, th e R t Hon. J.D . Anthony, M.P. and the M in is te r f o r B u sin ess and Consumer A f f a ir s , th e Hon. Wal. F i f e , M .P.)

The Government has c o n sid e re d th e q u e s tio n o f f u r t h e r a s s is ta n c e to

Tasmania f o r th e Mt. I y e l l M ining and R ailw ay Company L td.

On June 28, we announced t h a t , pending n e g o tia tio n s betw een the Common­ w e alth and Tasmanian Governments and Mt. L y e ll on th e q u e s tio n o f any f u r th e r

a s s is ta n c e to th e company - b e in g sh ared by the th r e e p a r t i e s - th e Commonwealth

had d e cid e d to c o n tin u e a s s is ta n c e c u r r e n tly b e in g g iv en f o r a f u r th e r th re e

months from J u ly 1, 1978·

F o llow ing co m p letio n o f f u r t h e r n e g o tia tio n s , th e Commonwealth h as ag reed to p a r t i c i p a t e i n a sh ared arrangem ent u n d er which th e Company w ill in v e s t

i n new ro a d and mine v e h ic le s n e c e s s a ry to p la c e th e mine on a more e f f i c i e n t

o p e ra tin g b a s is and th e Commonwealth and S ta te Governments w ill sh are on a d o l l a r f o r d o l l a r b a s is th e b a lan c e o f any cash d e f i c i t d u rin g th e p e rio d O ctober 1,1978

to June 30,1980, w ith an u p p er l i m i t on th e le v e l o f j o i n t Commonwealth and S ta te

a s s is ta n c e o f $7.6 m illi o n .

The Commonwealth's a s s is ta n c e to th e Company w ill be by way o f an i n t e r e s t - f r e e S e c tio n 96 G rant to th e Tasmanian Government, re p a y a b le Prom any f u tu r e p o s itiv e cash flow a ch ie v e d by th e Mt. I y e l l m ine.

The agreem ent betw een th e Commonwealth, th e S ta te and Mt. I y e l l has been re a ch e d i n th e e x p e c ta tio n t h a t th e p r e s e n tly d e p re sse d w orld copper p r ic e s

w ill r e t u r n to an economic le v e l and th e v i a b i l i t y o f th e Mt. I y e l l mine w ill be

r e s to r e d .

Since th e p r o v is io n o f s h o rt-te rm a s s is ta n c e by Governments, th e Company has ta k e n s te p s to improve th e m in e 's e f f ic ie n c y . The c o s t o f p ro d u c in g copper

o re h as been red u ced by 2C Y fo i n r e a l term s and c o n tin u in g c o s t re d u c tio n s have

r e s u l t e d i n c o s ts b e in g below th e average i n th e U n ite d S ta te s , which has the

l a r g e s t copper o u tp u t in th e w orld.

The th re e p a r t i e s to th e agreem ent have a g re e d t h a t in th e e v en t t h a t

th e re was a s i g n i f i c e n t d e t e r i o r a t i o n in th e w orld copper o u tlo o k , each would have

th e r i g h t to seek a rev iew o f th e ag reem en t.

In making i t s d e c is io n , th e Government was c o n sc io u s o f th e economic and

s o c ia l consequences f o r Tasm ania and th e p e o p le o f Queenstown should th e mine be fo rc e d to c lo s e down i t s o p e ra tio n s a t t h i s tim e . C losure would have in v o lv e d an

employment lo s s to Tasm ania o f up to 2000 p e o p le , an in c re a s e o f 1f$ in th e le v e l

o f unemployment i n t h a t S ta te .

A part from th e economic and s o c ia l h a rd s h ip t h i s would c a u se , o th e r

im p o rta n t consequences, in c lu d in g lo s s o f p o t e n t i a l p ro d u c tio n , revenue and expor·* e a r n in g s , would a ls o a r i s e from c lo s u r e .

CANBERRA, A.C.T. 23 August 1978