Home' InDaily : July 30th 2010 Contents www.independentweekly.com.au
3The Independent Weekly
July 30 - August 5, 2010
Electricity prices could rise
between 5 and 20 per cent
as a result of the Federal
Government s latest resources tax,
South Australia s mining industry
SA Chamber of Mines and
Energy CEO Jason Kuchel said this
would be on top of the increases
already expected in the wake of
rising demand, replacement of
infrastructure and the growing
focus on green energy.
While mining is not a burning
issue for most voters, Mr Kuchel
said the Mineral Resources Rent
Tax (MRRT) -- and the potential
energy price rises resulting from
the increased tax on coal and gas
used to fire power stations -- would
hit the hip pocket of all SA house-
New market research by Nielsen
shows power bills have catapulted
ahead of the state of the economy as
the main worry for most Australian
Mr Kuchel said most miners
believed electricity price rises were
an inevitable result of implementa-
tion of the resources tax.
"Most predictions haven t even
begun to consider the cost of the
new tax that will be passed on to
consumers," he said.
Pat Walsh, chairperson of the
Essential Services Commission
of SA, said he could not make an
informed comment on the impact
of the resources tax on electricity
However, Federal Minister for
Resources Martin Ferguson said the
price hike claim was unfounded.
"The price of thermal coal is set
on global markets and the MRRT
will not have an impact on world
thermal coal prices," he said.
"Commodity prices are only one
factor influencing electricity costs
which are made up of a range of
things, including network charges
for transmission and distribution,
and retail services."
Mr Kuchel said while there
were a number of mining issues
of concern to SA ahead of the
federal election, he believed the
MRRT would have the widest and
most immediate effect on average
Two other key concerns for
mining companies are investment
in infrastructure and the encour-
agement of exploration through
"Both major parties are yet to
come to terms with how infrastruc-
ture can be provided in a way that
stimulates economic development,"
said Hans Umlauff, chair of the
Resources and Energy Sector
He said power, water, roads, rail
and ports were fundamental to
developing SA s mining industry.
"You can have a wonderful deposit
but unless you can get services to it
and get transport for your product
out, you cannot develop it."
An interconnected energy
network would allow SA s abundant
renewable resources to be fully
explored. It would provide energy
at times when renewable is not
available or allow the pumping of
surplus energy back into the grid.
"Economically, it is almost
impossible to make renewable
energy work if you have to provide
the cost of the renewable plus the
back-up generation needed," Mr
BHP Billiton s Olympic Dam
project is the biggest mining project
in South Australia. While the
Liberal and Labor parties support
its extension and the continued
mining of copper, gold, silver and
uranium at the site, the Greens are
opposed to uranium mining. The
party said its stance does not mean
the closure of the project, but rather
the abandonment of the mining of
"When it s pulled out of the
ground, uranium is locked up with
other minerals, but can be left
behind through domestic process-
ing, with only the copper, gold and
silver extracted and exported,"
Greens Senator Sarah Hanson-
However, many miners say it
is impossible to separate copper,
gold, silver and uranium during
the mining process, and the Greens
position is a way to ensure exten-
sion of the Olympic Dam mine does
not go ahead.
The waters are muddied further
by the deals done between the Labor
and Greens parties. Many predict
this will result in a Labor senator
being replaced by a Greens Senator.
"The biggest concern is that the
Greens are most likely to have the
balance of power in the Senate," Mr
Kuchel said. "This potentially puts
Olympic Dam at risk."
SA mining companies say explo-
ration incentives are badly needed.
This was partially addressed by
the 30 per cent exploration rebate
announced in the first mining tax,
but it was dropped in the second
Many junior to mid-tier explora-
tion and mining companies do not
feel bound by the deal between
miners and the Government.
The Association of Mining and
Exploration Companies, which
represents these smaller firms,
plans to launch an advertising
campaign opposing the MRRT.
Graham Ascough, managing
director of Mithril Resources,
said there were between 50 and 100
exploration companies in SA crying
out for greater incentives.
He supports a share flow-through
scheme which would give investors
an immediate advantage by allow-
ing them to write off a company s
exploration costs on their personal
"Small investments in incentive
go a long way and send the right
message to the global exploration
community," he said.
"They need to know we are a
mining-friendly state, that we want
to be globally competitive and we
welcome investors. Exploration
booms lead to mining booms."
■ Parties ignore economy: Page 25
Power plays ahead of poll
as a key concern
for voters, the
are in store,
writes Kate Nash
Electricity prices are a key issue for voters.
BHP Billiton s Olympic Dam site.
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