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Does mining cost more than it's worth?

By Justin Glyn - posted Wednesday, 13 February 2013


While mining is a source of great wealth for Australia, its socio-ecological benefits are mixed. Yet the power of the industry means a balanced conversation on these issues is yet to start. Debate about the efficacy of the existing Minerals Resource Rent Tax (MRRT) notwithstanding, a broader discussion about the industry is unlikely, especially in an election year.

The role of mining in Australia is complex. Western Australia is rich in iron ore and there are significant deposits of natural gas, gold, coal, uranium, opals, lead and zinc across the country. Mining and exporting these minerals has proved extremely lucrative: according to the Australian Bureau of Statistics, mining has grown to just under 10 per cent of GDP, nearly doubling in the years between 2003 and 2008.

The industry is widely credited with allowing Australia to maintain its economy in surplus while similar European and North American economies adopt ever-tightening austerity measures to counteract the fallout from the banking collapses in 2008. Mining has made fortunes. Australia hosts the world's richest woman, mining tycoon Gina Rinehart. Mining magnates Clive Palmer and Andrew Forrest have spent millions on philanthropic causes.

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Mining's status as a mainstay of the economy has its disadvantages. Both major political parties are beholden to the industry and fear the advertising power its money can buy. Two brief examples demonstrate the problem.

The Labor Government under Kevin Rudd announced a plan to overhaul the outdated royalties system which allowed miners virtually untaxed access to what are, by law, largely government assets. Australian Election Commission figures show that the mining companies spent AUD$22 million campaigning against the new tax until Rudd was removed as leader by the Labor Party.

After Rudd was replaced by Julia Gillard, the mining tax was reconsidered. Gillard entered into negotiations with three of the major mining companies (BHP Billiton, Xtrata and Rio Tinto) for a limitation of the tax and confinement of its effects to miners' extraordinary profits. Perhaps it's not surprising that revenue raised from this watered down version of the MRRT has fallen well short of expectations.

The Coalition, on the other hand, is now the major recipient of mining company donations: just over AUD$3 million in 2010–11 according to Australian Election Commission figures. It has promised to repeal even the current, weakened MRRT, along with the carbon tax (which was introduced by the Labor Government as the price of support from its junior coalition partner, the Greens).

All of this, not surprisingly, has implications in the socio-environmental sphere. The National Radioactive Waste Management Act 2012 (Cth), which allows for the dumping of radioactive waste, limits the ability of affected parties to challenge the Minister's decision to nominate a waste dump (although a challenge to the nomination of a site on Muckaty Station as a radioactive waste dump is currently before the courts).

Also, while mining in remote areas has undoubtedly created jobs for Indigenous peoples, there are claims of increased cancer rates in those living near uranium mines.

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Government regulatory responses to mining pollution have been the subject of criticism. A 2012 Sunday Times investigation claimed that Western Australian authorities have failed to investigate dangerous levels of arsenic, cyanide, mercury and sulphur dioxide pollution in that state.

Meanwhile, in Mt Isa in Queensland, where Xstrata runs a lead mine, a medical survey in 2010 headed by Professor Mark Taylor of Macquarie University discovered that 11.3 per cent of children aged between 1–4 years in Mount Isa have dangerously high blood lead levels.

The outcomes of this study revealed clearly that not only are the policy approaches inadequate in Mount Isa [because they deal with secondary rather than primary prevention] but that the emerging evidence shows that current national policy guidelines for acceptable maximum levels of lead exposure are too high.

Significantly, the report attributed these levels directly to the mine. The Government's National Health and Medical Research Council maintains that the existing maximum level is appropriate as a 'level at which exposure to lead should be investigated' although it does go on to state that this is currently under review.

On the other hand, the mining lobby is increasingly competing with another important feature of Australian political life: agriculture. The hydraulic fracturing ('fracking') of rock to syphon off natural gas is particularly sensitive, with increased competition between farmers and miners over land, and the extraction process implicated in contamination of the water table and increased risk of seismic activity.

While there is no doubt that the mining industry offers great benefit to Australia, questions about the costs of those benefits (and not just the revenues from the MRRT) are long overdue.

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This article was first published in Eureka Street.



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About the Author

Justin Glyn is a Jesuit scholastic studying theology and philosophy in Melbourne. He previously practised law in South Africa and New Zealand. He holds a PhD in international and administrative law.

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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