With abundant precious natural resources such as coal, gold, copper, iron ore, natural gas and LNG, Australia has emerged as the new energy hub for global players and economies. The country is in the midst of a massive investment and expansion phase for its energy and resources products, mostly at the hands of private companies from Australia and abroad. The country has also emerged as the second most favoured destination for jobs after the United States in a recent survey. It promises to go a long way in catering to the sharply rising energy needs of emerging economies such as India and China and the rest of the Southeast Asian region.
Sujay Mehdudia caught up with Australia's Minister for Resources and Energy Martin Ferguson during a recent visit Down Under on the rise and rise of Australia. Excerpts:
How do you think will the imposition of the carbon tax regime from July 1, 2012, impact the investor confidence in Australia and will it deter foreign investors from coming in?
At the outset, I must make it clear that the Carbon Tax will have no impact whatsoever on the investment flows into the resources and minerals sector in Australia. The carbon tax was announced last year but investments have been coming in at a steady pace. Till now, nearly $430 billion has been committed in investment by companies from China, Japan, South Korea and even India. A sum of $170 billion alone has been committed for various LNG projects in Australia, including areas of Queensland, New South Wales and areas of copper, coal, uranium and iron ore.
Will the carbon tax push up cost of coal, LNG and iron ore to be exported from Australia?
There is absolutely no reason why the cost of coal, LNG, iron ore or gas would go up after the carbon tax comes in to force. The rationale behind the tax is that Australia's people, whose priced assets are being shipped abroad, should get some benefit out of the exploration of these assets and that is why the tax has been imposed. Ninty per cent of the tax will come from coal and iron ore and not from LNG as is being speculated. This tax will not apply to uranium. It will apply only to coal and iron ore. We have seen record commodity prices, far higher than anybody could have expected. Hence, we applied the new tax to get the one chance for the people of Australia to make a share of profits from these resources. Everything moves according to the demand and situation. Countries such as India and China are still growing at a reasonable pace. We will sell commodities according to demand and commercial prices. We are already having big contracts for supply of LNG and iron ore to countries such as China, Japan, South Korea and even India and we see no reason why this would slow down from July 1.
There are long-pending issues pertaining to the clearances in the oil and gas sector in India which has seen investments by some Australian companies also. Are you worried about these investments?
Why should we be worried about the investments being stuck. It is for the Indian government to worry as foreign investors are getting mixed signals as these oil and gas blocks were auctioned by the government to potential international customers after getting all clearances. Now the Ministry of Defence has some issues but they cannot just take back the given clearances like this. This does not work like this. As a friend of India, I would like to see more investments flowing on both sides and more partnerships flowering. We are there to meet the growing energy needs of India and other Asian countries and want a long-term partnership on the issue.
Could you spell out some of the major Indian investments that have come into Australia in the resources sector?
Indian companies have been quite active in the recent past. Two major Indian investments include the one by Hyderabad-based GVK group and another by the Adani group in some projects in New South Wales. The GVK group had acquired a stake in Hancock coal mines for $1.26 billion (Rs. 5,983.74 crore). The Adani group had acquired the Galilee Basin mines in Queensland and has successfully commenced mining exploration programme. It also involves the construction of a railway track for 400-500 km and the redevelopment of a port. I must make it clear that there are no environmental issues concerning the Adani group or GVK in Australia. The Tata group is involved in clean energy generation project with investment in a geothermal project with Australia's Origin Energy. During my recent visit to India, a lot of companies involved in mining, gas and resources held discussions and showed keen interest in investing in India.
What are the other areas Australia is looking to open up its resources sector for exploration purposes?
The government has drawn up a plan to turn the Latrobe Valley in Victoria into a major mining export hub, like the Pilbara in Western Australia. The valley had huge untapped potential to supply major offshore markets with brown coal. China, Japan and India all need energy security and are particularly keen on gaining access to brown coal. Victoria has the largest deposit of brown coal in the world after Russia.
Another sector we are looking at is the renewable energy sector. We will invest through R&D and offer innovation and technology to the world in the field of photovoltaic (PV) solar, geothermal, bio-mass and even wind energy. We have started, on an experimental basis, a wave energy project in Australia and this could prove to be a breakthrough technology for the future.