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Legislative Council - Fifty-First Parliament, Third Session (51-3)
2008-10-16 Daily Xml
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MINING SECTOR

The Hon. B.V. FINNIGAN (14:36): I seek leave to make a brief explanation before asking the Leader of the Government and Minister for Mineral Resources Development a question regarding the outlook for mineral investment in South Australia.

Leave granted.

The Hon. B.V. FINNIGAN: The global economy is currently undergoing a period of uncertainty. Indeed, I understand that the ASX was down 6.5 per cent before noon today.

Members interjecting:

The Hon. B.V. FINNIGAN: Apparently the economic security of our state is of no interest to members of the opposition. Banks are refusing to lend to each other, and the ability of companies, regardless of their worthiness to obtain credit, to raise finance through international credit and stock markets is becoming increasingly difficult. Given the current turmoil on world markets in recent weeks, will the minister provide any details of the state of investment in South Australia's mineral sector?

The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Small Business) (14:37): I thank the Hon. Mr Finnigan for his question and his interest in matters of significant importance to this state—

Members interjecting:

The Hon. P. HOLLOWAY: —matters that, obviously, members opposite are not interested in. They are only interested in playing games. As the Hon. Mr Finnigan pointed out, there is a great deal of uncertainty in world markets. That is why I was delighted by the statements this week by key players in the South Australian resources sector which provide this government with increased hope that our local economy will withstand much of the buffeting from the global credit crunch.

Only this morning, Uranium One Incorporated of Canada and Mitsui & Co. of Japan announced they have reached a joint venture agreement to develop Uranium One's Australian assets, which include the Honeymoon uranium mine in South Australia. The commitment from Mitsui of about $104 million to the joint venture will help to advance the development of the Honeymoon project into commercial production by 2010.

PIRSA granted final approval for the Honeymoon mining and rehabilitation program back in January this year after an extensive scientific and environmental assessment. In May, Uranium One announced it was seeking a strategic partner for the development of its Australian assets, including the Honeymoon uranium project. Mitsui has agreed to be that strategic partner, and this government now looks forward to work beginning on construction of the Honeymoon mine.

The decision by an overseas investor to commit millions of dollars to develop this mine amid the current global economic uncertainty highlights the confidence resource companies have in South Australia. Such confidence was recently reinforced by the results of the ResourceStocks World Risk Survey, which ranked South Australia No. 1 nationally and No. 2 internationally as a low-risk destination for investing in the minerals sector.

It is pleasing that Mitsui, a major Japanese company, has decided to become a key investor in this state through its association with Uranium One, itself a Canadian company with interests here in Australia, including the Goulds Dam and Billeroo projects and prospective tenements on the Stuart Shelf and Eyre Peninsula. The jobs and investment flowing from this joint venture agreement will support the long-term economic development of this state, and provide important export earnings for Australia. The joint-venture agreement is conditional on approval by the Foreign Investment Review Board, so final approval rests with our federal counterparts in Canberra.

I was heartened to note that Mr Greg Cochran, the executive vice-president for Australia at Uranium One, acknowledged the continued support that the company has received from the South Australian government in developing the Honeymoon project. A news release issued today by Mr Cochran states:

This agreement is a huge vote of confidence in the Australian mining industry and the South Australian uranium industry and brings a highly respected Japanese trading house with a long history in the nuclear business to the state.

We should soon be able to proceed with full confidence and build Honeymoon, as well as develop our other South Austrian prospects that complement our project pipeline.

Uranium One has enjoyed continued support from the South Australian government throughout this process, and we acknowledge and thank them in this regard.

I also acknowledge that uranium mining remains a contentious issue with some members of the community. So, I wish to assure the public that this project has been approved on the basis of using world's best practice. The use of in situ recovery to extract the uranium confirms Uranium One's commitment to using the most responsible form of mineral production possible.

Both PIRSA and Uranium One have put enormous work into ensuring that the Mining and Rehabilitation Program, approved in January this year, emphasises the high standards for rehabilitation of the site. Honeymoon will be capable of producing some 400 tonnes of uranium oxide a year, resulting in an expected mine life of six to seven years. Based on this production rate, the annual export contribution for the state is estimated to be about $40 million.

As the project steps up to full production, Uranium One expects to create about 60 new jobs at the mine, generating added value for this state. South Australia has a range of new uranium mines being developed and proposed, plus 81 uranium exploration licences now issued throughout the state.

Uranium mines currently being developed include the expansion of BHP Billiton's Olympic Dam project and Heathgate Resources' Beverley uranium mine, west of Broken Hill. Applications have also been received this year for mining leases for new uranium mines at Four Mile and Crocker Well. The Crocker Well uranium project, located 400 kilometres north of Adelaide, is 60 per cent owned by China's Sinosteel and 40 per cent by PepinNini Minerals.

The Sino-Australian partnership plans to export between $100 million and $200 million of uranium a year from its South Australian operations. Joint Venture Partners, Alliance Resources and Quasar Resources, have recently announced that they intend to mine the Four Mile uranium deposit from 2010, subject to necessary regulatory approvals. Four Mile, a rich high-grade 3.9 million tonne uranium deposit, is located near the existing Beverley mine.

These new mining projects would not have been possible under the ALP's former 'no new mines' policy. I am also pleased to inform members that just this week a mineral lease was granted to Hillgrove Resources Limited for the development of the 2 million tonnes a year Kanmantoo copper gold mine in the Adelaide Hills. Kanmantoo is the second metal mine to be approved in the Mount Lofty Ranges since the Rann Labor government came to office, following closely on the heels of last month's opening of Terramin's Angas zinc project near Strathalbyn.

Hillgrove, an Adelaide-based resource company listed on the Australian Stock Exchange, intends to resume mining at the Kanmantoo site, which had previously operated until the mid-1970s. The granting of a lease to Hillgrove for the Kanmantoo copper gold mine is great news for the South Australian economy. The project, located between Kanmantoo and Callington, will provide a significant boost to the local community, with the potential to generate more than 150 new jobs and the injection of $55 million a year into the South Australian economy.

I would also like to acknowledge the efforts made by Hillgrove to work closely with local community members and interest groups to develop its project. Formal community meetings have been held since mid-2005, and the Kanmantoo Callington Community Consultative Committee has identified a range of issues such as native vegetation, transport routes and water usage and their effects on local communities that are being addressed by Hillgrove Resources as it develops this mine.

PIRSA is currently working with Hillgrove to develop a mining and rehabilitation program (MARP), which will set out the operational standards for the project. Many of the recommendations put forward by the community, as well as the company's response, will be used as the basis for this MARP.

The continued confidence resource companies have to invest in South Australia, particularly in the current economic climate, is testament to the policies of this government. The millions of dollars of investment in the minerals sector and the jobs and exports they create here in this state are unarguably great news for the local economy and great news for all South Australians.

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