Mining for towns, or trouble
THESE fine books are must-reads for anyone interested in the history of mining in Australia and the present resources boom.
As the nation and our various governments struggle with the effects of the mining bonanza – on workers, families and communities – it is useful to consider how past generations coped. Hence Erik Eklund’s history, which focuses on six Australian towns established during past minerals booms.
In the late 19th century Broken Hill in NSW, Mount Morgan in Queensland and Queenstown in Tasmania emerged. The company-dominated Mount Isa in Queensland was founded in the 1920s while the coastal community of Port Pirie in South Australia and the company-designed Kambalda in Western Australia came into their own in the 1960s.
It is Eklund’s task to explain how, in these six distinctly local communities, in a relatively brief period, organisational and civic structures were established in the face of harsh conditions in isolated locations.
The most fascinating places dealt with in Mining Towns are Mount Morgan and Mount Isa. In 1882 the Mount Morgan goldmine, 39km southwest of Rockhampton, began production. A syndicate of six that included the three Morgan brothers and Rockhampton-based investors, including local solicitor William Knox D’Arcy, oversaw operations.
While the mine soon established links to Sydney and Melbourne, its Rockhampton capital base was a distinguishing feature of the first 20 years of existence. Although in its early years the mine was primarily worked for its gold, Mount Morgan was soon celebrated as the richest gold and copper mine in Queensland. It pre-dated Broken Hill and, within a few years, Mount Morgan financiers invested in Broken Hill, while Broken Hill wealth was invested in Mount Morgan shares. Almost 1000km from the coast, and with a difficult semi-arid desert environment to manage, Mount Isa is one of the largest mining towns in Australia, a testament to the extent and richness of the silver, lead and zinc-bearing ore and the substantial copper deposits that lie beneath it.
As Eklund explains, large numbers of Mount Morgan workers moved to Mount Isa in 1929. Their mine had closed and Mount Isa was starting up, with work available at the mine, on the smelters and the railway line.
With the expansion of the mine in the 1950s, Mount Isa became one of the most productive and mechanised mines in the country while the town (now a provincial city) boasted a strong and settled local community. These days, in comparison with Mount Morgan, whose population is 11 per cent Aboriginal, 15 per cent of Mount Isa’s population is indigenous, many of whom are descendants of the proud Kalkadoon warriors who in the 1880s had fought fiercely against the white invaders.
As the 21st-century mining boom proceeds, temporary camps and fly-in, fly-out workers are increasingly part of our isolated regional landscape. But as Eklund suggests, imagine Australia without Mount Isa or Kambalda: it would be geographically more homogenous and culturally much less diverse.
As newer mining companies reduce their commitment to the idea of building towns, he argues, workers are likely to have a very different relationship with the place they work in. It seems indisputable that fly-in, fly-out workers will not build a Broken Hill or a Queenstown, or even a company town such as Kambalda. The temporary camps and dongas, he says, will probably “not be the subject of nostalgic reminiscence, and are unlikely to leave any substantial material remains”.
Eklund’s eloquent conclusion, “Space has been truly mastered by capital, but at what human cost?”, segues nicely into Paul Cleary’s Mine-Field.
Cleary, a senior writer on this newspaper, writes well and argues cogently. As he explains, from the mid-1980s various Australian governments stared down the powerful banking and manufacturing lobbies and slashed tariffs, deregulated the financial system, floated the dollar, applied a consumption tax to most goods and services, and introduced robust regulation of companies and financial institutions. In stark contrast, regulation of our resources sector remains in the hands of poorly resourced and often opaque state government departments that lack independence.
The fact is, in present-day Australia, state governments carry most of the responsibility for regulating increasingly complex mineral projects that are part of our resources rush. Yet as regulators and as revenue collectors, state governments remain deeply conflicted.
It is difficult to dispute Cleary’s conclusion that, in comparison with the institutions that govern the rest of the economy, “resource regulation in Australia resembles those of Third World countries”. Not that the global resource giants are complaining! It is also hard to disagree with Cleary that, rather than royalties and other imposts, the mining industry should be subject to profits-based taxation that will return a greater share of revenue to Australian citizens.
Surely resource companies should be at least partially responsible for the numerous health and safety problems that arise from the dangerous combination of employees working 12-hour-plus shifts at 24/7 operations? And for the many difficulties workers face through commuting by plane or roadbetween mining sites and their homes and families?
Cleary makes a strong argument that the human and agricultural costs of the mining juggernaut, which has rolled across communities in the Darling Downs, the Hunter Valley and elsewhere, are too high a price for us to pay. Giving mining companies such sweeping access could result in permanent damage to Australia’s food bowl and to water resources.
These are matters for serious debate, but unfortunately the issues have become politically clouded and various ideological battles are being fought over them. But, as these splendid books suggest, all Australians have a stake in the future and although mining is important it should be regulated and scrutinised and the massive profits shared.
Mining Towns: Making a Living, Making a Life
By Erik Eklund
UNSW Press, 298pp, $49.99
Mine-field: The Dark Side of Australia’s Resources Rush
By Paul Cleary
Black Inc, 224pp, $24.99
Ross Fitzgerald is emeritus professor of history and politics at Griffith University and the author of 35 books
The Weekend Australian, September 15-16, 2012.
ROSS Fitzgerald rightly highlights Paul Cleary’s implicit question: What will we reap from “resource regulation in Australia that resembles those of Third World countries” (“Mining for towns, or trouble”, 15-16/9)?
For regional Australians, it is the speed of the mining juggernaut that is the problem. The short-term thinking of state and federal governments and of the mining corporations is what angers us as our towns and families are trampled in the rush.
Dr P. A. Smith, Mount Archer, Queensland
I disagree with some of the comments in this article. But the most damaging is the lack of understanding of how royalties are applied. Well, letâ€™s say the royalties on iron ore and coal which are the most important. The myth is that a profits based tax will produce more income for the country than the current royalties regime. At the height of the price boom and for a blip of time in the history of mining these minerals this may have been the case. However, if you understand the Ad Valoreum (Latin for “according to value”) rules that apply to these minerals and the unfortunate case that mining is not highly profitable over the long term then you will see that this is false.
The Ad Valoreum rules are not based on a fixed dollar per tonne but based on a percentage of the price received less some but not all of the costs of delivering the mineral to the ship. For example, the actual costs of the mining are not considered but processing (upgrading) and rail freight may be. In the way, if prices drop even to the point of the mine being temporarily unprofitable, royalties will still be paid. If permanently unprofitable then it would need to close as you would expect. If prices go up to a very high level then much more royalties will be paid. In QLD the state even escalates the percentage as the price goes up to ensure the state gets an even bigger slice.
But the commodity mining industry will always have down times and the up times are always short lived. Why? Because as prices go up due to demand, companies will always expand existing operations and develop new ones to ensure they have market share. To do otherwise, that is to attempt to keep the price high, would require some form of collusion amongst companies and this is illegal. I have heard it said that, in general, mining companies only provide about a 5% return on capital invested over the long term.
As we see prices of iron ore stabilise at a much lower level than over the last couple of years, then I would expect that royalties will return much more than the MRRT. The original form of the super profits tax was a punitive tax that was set to make a major disruption to the industry. Who knows what the outcome of that would have been but my theory is that the companies focussed on profit, as they should be, would have eventually left for greener fields and sold all the assets to the Chinese. The Chinese are not interested in making profits in Australia but only want to secure a vertically integrated supply. The Federal government would have had to agree to keep the mines going to maintain employment. The mines would have become less profitable under this regime and the tax would have dried up.
I am happy to discuss this further as the argument for the original super profits tax and the MRRT only look at the very good times and not the vast majority of mining history. Many journalists simply do not understand this and perpetuate this misinformation.
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