Asia’s richest woman Gina Rinehart said high costs may prompt mining companies to abandon iron-ore operations in Australia, where she’s amassed a fortune estimated at $19.3 billion.
“The evidence is unarguable that Australia is indeed becoming too expensive and too uncompetitive to do export- orientated business,” Rinehart said in a video presentation posted on the Sydney Mining Club website. “We are becoming a high-cost and high-risk nation for investment.”
The 58-year-old has been a vocal critic of taxes on carbon emissions and coal and iron-ore profits, creating tensions with Prime Minister Julia Gillard’s government. With signs emerging that the nation’s resources boom has peaked as BHP Billiton Ltd. (BHP) and Fortescue (FMG) Metals Group Ltd. delay projects, Rinehart said Australia risks losing investment to West Africa’s nascent mining industry.
“Business as usual will not do,” said Rinehart, who sparked union criticism after getting government approval in May to hire more than 1,700 overseas workers on her Roy Hill mining project in Western Australia. “Africans want to work. Its workers are willing to work for less than $2 per day.”
Gillard, who was forced to counter claims made by Resources Minister Martin Ferguson last month that the boom was over, defended her government’s policies in an Australian Broadcasting Corp. interview today and said Rinehart’s comments made sense “only if you deny the facts.”
“The outlook for mining is strong,” Gillard said. “Gina Rinehart has always been opposed to the Minerals Resource Rent Tax, she’s always been opposed to carbon pricing. Where’s the news in that?”
Rinehart’s comments come less than a week after she criticized her countrymen’s attitude toward work in an article for Australian Resources and Investment magazine. She suggested a reduction in the minimum wage and lower taxes to help spur investment and employment.
“There is no monopoly on becoming a millionaire,” she wrote. “If you’re jealous of those with more money, don’t just sit there and complain; do something to make more money yourselves -- spend less time drinking, or smoking and socializing, and more time working.”
In the video presentation, Rinehart reiterated her views on the need to abolish the resources and carbon taxes, cut red tape, change industrial-relations laws, boost Australia’s productivity and push for a special economic zone in the nation’s mineral-rich northern regions.
“Labor costs are typically 35 percent higher here than on the United States’ Gulf Coast and they also could have lower levels of labor costs still if they utilize illegal labor from Mexico and the south,” she said.
Rinehart is among Australian billionaires accused by the government of trying to use their wealth to shape public opinion. She has a 15 percent stake in Fairfax Media Ltd. (FXJ), the publisher of the Sydney Morning Herald and The Age newspapers, and has failed to get a board seat for herself after refusing to sign the publisher’s Charter of Editorial Independence.
The mining magnate is in a legal dispute with three of her four children over control of a trust that holds almost a quarter of the voting shares of her Hancock Prospecting Pty.
Her father, Lang Hancock, discovered minerals that helped make Australia the world’s biggest iron-ore exporter, while Rinehart, through Hancock Prospecting, has forged joint venture agreements with Rio Tinto Group for operations in Western Australia’s Pilbara region.
The value of the assets Rinehart inherited from her father almost 20 years ago has been driven up Chinese demand for raw materials, which created the biggest resources bonanza since a gold rush in the 1850s. She now has an estimated wealth of $19.3 billion, according to Bloomberg’s Billionaires Index.
Gillard said today that Australia still has a pipeline of investment projects estimated to be worth A$500 billion ($510 billion).
“That pipeline is being squeezed and is becoming risky,” Rinehart said in the presentation. “Productivity problems, labor shortages and approval costs and delays are to blame.”
BHP, the world’s biggest mining company, said Aug. 22 it doesn’t expect to approve any spending on major projects this fiscal year as metal prices decline amid sluggish global growth.
Rio Tinto (RIO), the world’s third-largest mining company, said yesterday it plans to cut some jobs at the Argyle diamond mine in Western Australia to reduce costs and improve efficiency. On the same day, Fortescue, Australia’s third-biggest iron-ore producer, cut its full-year capital spending forecast by 26 percent.
Signs of a stalled boom are putting pressure on Gillard’s government, trailing in opinion polls ahead of elections next year, as it seeks to end four years of budget deficits and return to surplus this financial year. The opposition Liberal- National coalition has attacked her new taxes on carbon emissions and mining profits, saying they have created investor uncertainty and risk stifling economic growth.
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