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Thursday, 27 April 1972
Page: 2073

Mr Les Johnson (HUGHES, NEW SOUTH WALES) - I want to discuss the threat to the coal industry and the need for the establishment of a national fuel policy. I want to talk about the impending closure of underground coal mines in New South Wales and Queensland with the consequences of large scale unemployment and serious damage to the economy of mining communities together with irretrievable impairment of resources and capital development. The announced intention of American owned Clutha Development Pty Ltd to close the South Clifton and North Bulli No. 2 coal mines on the south coast of New South Wales is an ominous warning of a large scale and rapidly developing crisis in the Australian coal industry. It underlines the need for a national price for coal, as is the case with iron ore, uranium, woodchip and certain primary industries. Soon after the closure of these mines flooding will occur and this valuable resource of hard coking coal will be lost irretrievably. The South Clifton mine is said to have some 26 million tons or 294 acres of high grade coking coal yet to be mined.

The present crisis has been precipitated by the loss of Italian markets by the Clutha mines to the Goonyella open cut mine in the Bowen Basin, Queensland, which is owned by the Utah Development Company. It is worth noting that Australian hold only 10 per cent of the shares in Utah's interests in the Central Queensland Coal Association, a joint enterprise with Mitsubishi Development Pty Ltd. Although the price of Queensland open cut coal to Italy has not been disclosed it is believed to be on a similar basis as Goonyella sales to Japan, said to be $11.18 a ton as against an average price of $13.16 a ton f.o.b. for Clifton coal. The open cut mines of Queensland have enormous production cost advantages over both Queensland and New South Wales underground mines. Additionally the Queensland Government is recklessly allowing its coal to go at the give away royalty price of 5c a ton and a net rail freight return of only 23c a ton. Shipment of coal from Hay Point near Mackay also is economically advantaged as ships up to 110,000 tons deadweight can use that port as against the smaller ships which use the traditional coal discharging ports in New South Wales such as Newcastle with a maximum of 58,000 tons deadweight, Balmain with 44,000 tons deadweight and Port Kemble with 58,000 tons deadweight.

The inevitable sequel to this market price advantage is the relegation of many established mines in New South Wales and Queensland and disaster to the highly committed communities which serve them. The Chairman of the New South Wales Joint Coal Board, Mr Hartnell, has stated:

The present marketing policies being followed by Utah could well have serious consequences for both Queensland and New South Wales underground mines. The order of advantage of Utah's coal costwise is about $4 a ton.

In New South Wales, underground mines produce more than 92 per cent of the State's coal output. Mr Evan Phillips, the General President of the Miners Federation, has said:

If open cut mining development in Queensland was allowed to continue without control all underground mines in New South Wales would be put out of business.

He predicted that the Utah-Mitsubishi consortium could have a complete monopoly of the 20 million ton coal export trade within a few years. Known resources controlled by Utah contain some 325 million tons of open cut coal, while another consortium holds even bigger resources in the Hales Creek area of central Queensland. Utah has declared that its recoverable reserves of low volatile coal with an ash content of less than 8 per cent amount to 1,000 million tons. Speculation now is rife that Utah may soon swallow up more of the Japanese export trade and so imperil the livelihood of thousands of underground miners in varipus parts of New South Wales and Queensland.

As the Utah-Mitsubishi consortium ravages the easily won high grade coking coal from its open cuts, it is stock piling huge reserves of low priced steaming coal for future use in the local market. In this regard the Queensland Government mining journal reports:

As a result of certain provisions included in the Central Queensland Coal Associates Agreement Act 1968, the Queensland Government will be able to purchase very cheap coal for use in State power stations.

The Goonyella open cut project in central Queensland was opened last November. It is linked by 125 miles of railway to a new port at Hay Point near Mackay. Orders already have been secured for the supply of 85 million tons of coal to Japanese steel, gas and chemical companies over 13 years. Next year the price for this contract drops to $US11.98 per long ton f.o.b and will remain at that rate at least until 1977 with a maximum possible price escalation of 30c.

The Central Queensland Coal Association also will bring the new Peak Downs open cut into production this year. Then in 1974 the Saraji open cut will open, to be followed by yet another project, the Norwich Park mine, which is scheduled to come into production in 1975. With these 4 mines in production this AmericanJapanese group will swallow up some 18 million tons of the market each year on a capital investment of about $400m. The Miners Federation contends that in Queensland, as in New South Wales, open cut production should be regulated by integrating open cut and underground mining to preserve the mining life of that region and to bring long term benefit to that State and to the nation.

Through its inaction the Government has encouraged unbridled cut-throat competition and price undercutting by foreign owned companies in the Australian coal industry. Australia's low volatile and low ash content coking coal used for steel making is among the best in the world, yet it is notoriously underpriced as a result of the Government's failure to formulate a national fuel and marketing authority and the complete absence of any national guidelines for production and marketing. Comparable coal from the United States of America was sold at prices in excess of $US20 a ton f.o.b. On the other hand Goonyella and Peak Downs coal is being supplied this year at SUS 12.84 a long ton and for the period 1973 to 1977 will sell at $US12.63 a long ton. Whilst the Japanese buy nationally, Australia does not sell nationally. Our producers are being pitted against one another in a ruthless price cutting competition which is denied any Government support, regulation or protection. Now the chickens are fast coming home to roost and the situation calls for an end to Government indifference. The Joint Coal Board has warned about this trend. In its last report it states:

The Board has been and continues to be critical of the unduly low prices at which our export coals continue to be sold. An increase of about $2 per ton is justified and Australian export coal would still remain relatively cheap.

Australian Coal resources are in the ratio of 4 to 1: That is, 80 per cent of our recoverable coal can be won by underground mining and 20 per cent by open cut mining. To husband our resources properly and to prevent the collapse of the underground section of the industry, coal production must be undertaken on the 4 to 1 basis.

No mines need close if this Government acts quickly by utilisating its powers under the Coal Industry Act to facilitate the short term stockpiling of South Clifton and Bulli output until a national marketing plan is introduced. Has this Government any answer to the crisis confronting the coal industry? Will the Government hide behind the Constitution as an alibi for its indecision and inaction? Is our Prime Minister capable of standing up. to the intimidatory and parochial stand . of the Queensland Treasurer, Sir Gordon Chalk, who shows a complete incapacity to think nationally on this question? A national fuel authority must be established quickly. Guidelines must be formulated to regulate production, marketing and the price of coal. Existing mines must be kept in production. Above all, miners who have gone into the bowels of the earth to win its riches for the benefit of all Australians must be given the security of full employment and the sanctuary of the home and the community in which they and their families live.

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