News Miners reject local content move Peter Roberts, David Crowe and Jamie Freed 671 words

18 January 2012 The Australian Financial Review AFNR First 9 English Copyright 2012. Fairfax Media Management Pty Limited. The minerals industry has rejected moves by the federal government to require resources projects valued at more than $2 billion to spell out their local content plans at an early stage. A Minerals Council of Australia spokesman said yesterday the government's premise that resources companies were using overseas supply chains rather than Australian suppliers was not backed by empirical evidence. "Equally, nowhere is there a cogent, economy-wide case made for extending and tightening what are already complex processes ... the Australian government should address these points directly prior to advancing solutions in search of a problem," the spokesman said. The council's intervention comes as a working group announced at the jobs summit in October considers government proposals for major projects, including resources, to publish opportunities on a website and report on their Australian Industry Participation plans. Trade unions have used the working group to call for AIP plans at the environmental impact stage, for Australian standards to be applied to imports and to extend plans to new inputs such as technology, mining equipment and computer software. The Australian Workers' Union wants the plans to apply to projects with a value of more than $500 million, vastly increasing their impact. Yesterday Prime Minister Julia Gillard expressed concern at "anecdotal evidence" the mining industry was not using local firms. "We need to take it to the next stage, get the clear evidence, and if clear evidence is available then we will certainly do everything we can to press the case internationally because it's not fair to Aussie manufacturing," she said. The council yesterday rejected the basis for the proposed changes, which it said would increase mining companies' compliance burden and add complexity to projects. It said $75.8 billion or 88 per cent of the sector's demand for goods and services in 2009 was supplied by local industry including local steel content of 53 per cent, 65 per cent for structural metal products and 72 per cent for sheet steel. "If there is seen to be a problem, our preference is for enabling measures where government and industry work together to improve the capacity of local suppliers rather than reaching for a new regulation as a first step," said John Kunkel, a director at the council. The Australian Petroleum Production and Exploration Association favours building supplier capabilities. The chief executive of Fortescue Metals Group, Nev Power, denied domestic companies were being overlooked. Mr Power said: "When we are going offshore to purchase equipment items, that capability just isn't here in Australia." The proposals have divided industry with the Australian Chamber of Commerce and Industry opposing t changes as increased red tape. With telecommunications projects affected, Telstra is concerned that requirements for publishing AIP plans could provide "visibility into commercial mechanisms and pricing points". But BlueScope Steel favours tighter AIP plan regulations while the Australian Steel Institute said only 12 per cent of the steel in major resources projects was local. The ACTU has led the campaign to beef up AIP plans, holding up the Queensland scheme as a potential model for Canberra. The union body wants project developers to break major plant often made in modules in Asia into smaller packages to allow local companies to bid for work. Page 1 of 2 2012 Factiva, Inc. All rights reserved.

An ACTU source said there were some inputs to mining which it would never be economic to produce locally, and plans should focus on "contestable" inputs at the earliest stage. "There was a time when th e commonwealth was out in front in terms of Australian participation but 10 years later, Western Australia and Queensland are in front," he said. The federal government's proposals include a requirement that AIP plans apply to projects which receive a grant or funding of more than $20 million. It also wants project developers to publish more extensive details about local opportunities if they want to receive a 5 per cent tariff exemption on imports under the Enhanced Project Bylaw Scheme. Document AFNR000020120117e81i0000w

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