While the Australian Labor Party squanders billions of dollars chasing a non-permanent seat on the UN Security Council to appease the ghost of its former leader, sacrificed before completing even one full term as Prime Minister, to the insatiable appetites of the gods Greed and Self Interest lining their own political pockets in the process, Australia and its Pacific neighbours are being sold by one of Australia’s wealthiest men to the Chinese State.
Australian Greens leader Bob Brown says he’s concerned at the growing influence of Australian mining firms in Papua New Guinea.
A year out from PNG national elections, the United Resources Party reportedly raised $600,000 at a weekend function in Port Moresby attended by a number of international business leaders including one of Australia’s richest men Clive Palmer.
The URP has six members of parliament including Petroleum and Energy Minister William Duma, Environment and Conservation Minister Benny Allen and Tourism Minister Guma Wau.
Mr Palmer, who owns half the PNG-focused oil and gas company Chinampa Exploration, reportedly told the function PNG was entering “a new era“.
“This is the promised land and with a stable government and support from the community, this country can take off…You have gas, oil and other resources…there is a lot of opportunity here and the government must create the right environment.”
Senator Brown, who visited PNG two weeks ago, told reporters in Canberra on Tuesday that the growing influence of Australian mining companies was troubling.
“It is very, very troubling … in a marvellous country like PNG where democracy ought to be based on a fair go for everybody.”
What exactly is troubling Senator Brown?
PNG is home to the world’s first deep sea mining project.
It’s owned by the Canadian firm Nautilus Minerals and will extract gold and copper from the floor of the Bismarck Sea.
Senator Brown says he’s worried that if the technology succeeds, it could be used in every ocean in the world.
He’s also concerned about the impact of the Ramu Nickel mine in Madang dumping its contaminated mine waste into the sea.
The mine is majority owned by the Chinese government and the Australian-based firm Highlands Pacific is a junior partner.
Next month PNG’s National Court will make a final decision whether to grant landowners a permanent injunction to stop the dumping.
Chinampa Exploration is an oil explorer focused on Papua New Guinea. Clive Palmer owns a 50 per cent stake, but there is little publically available information on this business.
Palmer made a spectacular debut on BRW’s Rich 200 list in 2007 with a fortune of $1 billion. Last year, BRW put him on the list at $ $3.92 billion, although a 60 Minutes report in 2009 claimed Palmer was reportedly worth $12 billion.
The $3.2 billion difference between the BRW and Forbes valuations raises some interesting questions about the art of valuing wealthy entrepreneurs and suggests that wealth can really be in the eye of the beholder.
Clearly, Palmer is a difficult target to value. While he holds some stakes in publicly listed companies (including Australasian Resources and Gladstone Pacific Nickel) the bulk of his empire is privately held and thus not so easy to value.
In addition, the bulk of Palmer’s assets are as yet undeveloped?—?while he owns vast tracts of resource-rich ground, in most cases they are not yet producing dollars.
What are palmers other resource assets?
Australasian Resources is a listed iron ore miner in which Palmer’s Mineralogy holds a 66 per cent stake, thanks to a deal back in 2006 in which Mineralogy sold some of his Pilbara iron ore reserves to the company.
Gladstone Pacific Nickel
Nickel miner Gladstone Pacific is an Australian miner listed on the Alternative Investment Market of the London Stock Exchange. The company is developing a $US3.65 billion long-life, nickel and cobalt refinery in Queensland.
An oil explorer established in 2001 to examine the Canning Basin region in Western Australia. According to Mineralogy’s website, the company is the third largest lease holder of prospective oil and gas regions within Western Australia. Palmer owns a 50 per cent stake.
Cold Mountain Stud
Palmer’s harness racing stud.
Gold Coast United
Palmer has got a lot of publicity from his A-League soccer club, but given some of the issues he has had with the financial model of the world game (he infamously capped crowd numbers at 5000 for some games to save money) it’s unlikely this is a big earner. An A-League licence is worth $5 million, although Gold Coast United’s value could rise substantially as it expands.
Getting a line on what assets are contained in Resourcehouse is difficult as there is very little public information around about the business – it doesn’t even have a website at this stage. Many of the assets that Resourcehouse has been reported as owning are contained in the private group, Mineralogy, which lies at the heart of Palmer’s empire.
There are three main parts to the empire – nickel, coal and iron ore.
The nickel division is built around the Yabulu refinery, which Palmer bought from BHP Billiton in the middle of last year for $500 million.
The coal division is centred on the giant China First project, which has been at the centre of this week’s issues. The China First project was brought into the stable through Palmer’s acquisition of Waratah Coal in late 2008 for about $125 million.
The iron ore division is the centrepiece of Mineralogy. Palmer says the division holds 160 billion tonnes of magnetite iron ore.
In 2006, Mineralogy sold a licence to mine six billion tonnes of iron ore to China’s CITIC Pacific Mining to develop the $5 billion Sino project. According to the Mineralogy website, CITIC Pacific paid Mineralogy $US215 million for the right to mine an initial one billion tonnes, while Palmer’s firm will also receive a royalty of $0.30 per tonne of magnetite ore taken and 6-10 per cent of the value of production by CITIC Pacific, “which is currently in the order of $US100 million per annum for 25 years for each one billion tonnes purchased”. In other words, this is a huge and lucrative deal. The royalties alone would be worth $1.8 billion if the whole six billion tonnes of iron ore are mined.
China and Palmer
China is leasing huge areas of land in Australia to secure a vital source of mineral resources, the latest sign of its acquisitive approach to the commodities trade.
No longer satisfied with buying iron ore and coal from Australian mining companies, Rio Tinto and BHP Billiton, China is developing its own mining operations, funding a port with a mile-long breakwater jutting into the Indian Ocean.
Citic Pacific’s Sino Iron project, in the Pilbara region in the north-west of Australia, illustrates the scale of Beijing’s ambitions. China expects to mine at least 2bn tonnes of ore from Sino Iron over the next 25 years. The open cast mine, which will become fully operational this year, promises to be the biggest magnetite iron ore mine in the world. The ore will be processed on site and brought to China on a fleet of purpose-built container ships
The deal’s biggest winner is none other than Australia’s own Clive Palmer. His partnership with Citic Pacific is one big reason why he is close to the top of Australia’s rich list.
According to Palmer, his mining alliance with the Chinese has barely begun. He claims to control the mining rights to land which contains 160bn tonnes of iron ore – 100 times greater than the entire global output of iron ore last year.
If China’s steel mills maintain current level of demand, Palmer is set to become an “Aussie oligarch” to rival Russia’s richest resource billionaires, a suggestion to which he responds with a smile. “I hope I’m nicer,” he says.
Palmer commutes between Australia and his other home in Beijing by private jet, and boasts of friends at top levels in the Chinese government. Chinese banks seem to trust him. Last year, the Import-Export Bank of China made a $5bn loan to a Palmer-backed Queensland coal project which is supposed to deliver China’s power industry 1bn tonnes of coal in the next 30 years.
What does this mean for Australia and the pacific?
The first and most obvious issue regrading palmer’s alliance with China is that all of the minerals he is ‘selling’ to China are being stolen from land that is morally if not currently legally the property of the indigenous peoples of Australia and PNG.
While palmer is making billions of dollars in revenue from this land, the indigenous people who properly own both the land and its resources are being thrown a few scraps.
Meanwhile, another Chinese-owned metals conglomerate, has plans to develop a massive opencast iron ore mine in the Weld range, a ridge of hills 400 miles north-east of Perth. Geologists believe it will yield up to 300m tons of high-grade iron ore over 20 years. But it is a sensitive project. The red-tinged rock is not just rich in iron oxide, it contains archaeological evidence from thousands of years of Aboriginal life.
Colin Hamlett, an elder of the Wajarri people, is leading a campaign to prevent Sinosteel digging up his ancestors’ sacred places. His great-grandmother was buried at a site designated as dump for mine tailings. Hamlett says:
“This land tells the story of my people, our songlines, our camps, our relics, they’re all here.”
Let’s leave aside the issues surrounding the theft, rape and destruction of indigenous people’s land for a minute and concentrate on the benefits to the wider Australian community of selling/leasing Australian resources to a foreign power. Palmer and his mates in Canberra argue that Australia reaps uncounted riches by way of royalties and taxes! But what are the realities?
Other areas within the Australian Government maintain that multinational miners including BHP Billiton and Rio Tinto pay just 13 per cent company tax, while their domestic counterparts give back 17 cents in the dollar.
It has released data from the US-based National Bureau of Economic Research showing miners in Australia pay less company tax than they would in Canada, the United Kingdom or the United States.
The company tax rate in Australia is a flat 30%, which means that multi-national miners are paying less than half this amount. So not only are the multi-national miners raping Aboriginal Australia, they are stealing the very national resources that middle Australia relies on to maintain its fear induced catatonic state.
What is the Australian Government doing about the sale of Australia and the Pacific to the Chinese?
Nothing, absolutely nothing! Why? Because the current labor Government is way too busy appeasing the ghost of a Prime Minister, past, by attempting to buy him a seat on the UN Security-Council a seat which Australia does not deserve because of its appalling human rights record.
So while Labor squabbles amongst itself, again, one Australia’s own citizens is busy selling Australia’s plundered resources to a foreign power and potential rival. You gotta love this country, don’t ya?