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Mining the Tarkine – Tasmania’s resources bust

Situated in Tasmania’s north west, the Tarkine is a globally significant wilderness area containing extensive tracts of Gondwanan temperate rainforest. Although not designated as a National Park, or part of the Tasmanian Wilderness World Heritage Area, the area contains a wildly diverse landscape with rich plant and animal life including platypus, echidnas, wombats and the famous Tasmanian Devil.

The Tarkine also has strong links to Indigenous Tasmanians and is home to some of the richest aboriginal archaeological sites in Australia. These internationally significant sites display, “a richness of cultural heritage and a relative lack of disturbance that is extremely rare”.

However remarkable this area, the Tarkine has been under sustained threat from the resources industry. The largely mining and forestry dependent northwest has been struggling to diversify away from primary commodities and manufacturing resulting in high levels of unemployment, especially amongst young people, and a stagnant economy.

The Tarkine is mostly controlled by Forestry Tasmania which has allowed Mineral Resources Tasmania, both state-controlled, to grant mining exploration licenses.

While 80% of the Tarkine is protected from logging, only 5% is protected from mining. There are currently 58 active mineral exploration licenses across the Tarkine Wilderness World Heritage Area. Between 2012-2017 10 new mines have been proposed, 9 of which are open cut, Pilbara style mines.

The struggling Tasmanian economy

On virtually all measures of economic success, Tasmania comes in last. Tasmania has the weakest performing economy in Australia and the second highest rate of unemployment. The picture in the State’s north west is even worse with youth unemployment the worst in Australia, approaching an alarming 25% in some areas, more than triple the national figure.

The Tasmanian Chamber of Commerce and Industry’s chief economist, Phil Bayley, cites a number of contributors to Tasmania’s struggles including the collapse of manufacturing and forestry, and long-term issues such as an under performing education system with literacy and numeracy levels alarmingly lower than the mainland.

Historically the Tasmanian economy has been a resource-based one and has been hit hard in recent years by the collapse of global commodity prices.

In 2015 copper prices crashed to their lowest since the middle of the global financial crisis in 2008, with oversupply and weaker demand, largely from China whose economy has slowed to it lowest levels in decades. Iron ore has plunged to below US$50 a tonne, down from the last peak of US$150 in 2013, as is expected to continue its downward trajectory. Tin prices have fallen 17% in the last 2 years, despite expectations they would stay high.

The commodity price collapse has left the Australian budget in a dire position, wiping $3 billion from projected income in 2015-16, as successive governments refused to believe the good times of the resource boom would end.

Tasmania is starting to wake up to the end of the resources boom. A 2013 report by the Tasmanian Department of Treasury and Finance identified the expected decline in commodity prices and the associated winding down of mining investment, leading to a structural shift in the Tasmanian economy.

“Manufacturing jobs are disappearing, the mining sector is losing so many jobs… and we’ve heard nothing from the Government as to how they’re going to tackle those issues.” – State Opposition Leader Bryan Green

Despite this, the expansion of the mining and forestry industry in Tasmania is supported by both sides of politics.

Mining in the State’s north west

Mining makes up a very small share of Tasmanian employment and the figure has been shrinking.  Since the peak of Tasmania’s mining boom two years ago when the industry employed 5,300 workers across the state, about 3,000 jobs have been lost.

The vast majority of Tasmania’s mines operate on the west coast, supporting small towns like Queenstown, Waratah, Tullah, Rosebury and Zeehan.  Job opportunities on the west coast are few and closure of a number of mines in recent years has hit the region hard, with hundreds of jobs lost.

With low levels of qualified workers in Tasmania’s north west the majority of workers are ‘drive-in, drive-out’ or even FIFO, coming from across Tasmania and Australia rather than local towns. When the Mount Lyell copper mine was operational only half of the workforce were locals.

The lack of economic diversity has left whole towns dependent on mining, often for generations.

Queenstown is a copper mining town in Tasmania’s northwest famous for the barren moonscape which surrounds it, created when the surrounding wilderness was felled to fuel the copper smelter. It has been dependent on the Mount Lyell mine for a century and locals just don’t know what to do without it.

The mine ceased operations in 2014 due to three fatalities at the site, although the collapse in the global copper price was also a major mitigating factor. 350 jobs were, or are in the process of, being shed – crippling the town which was entirely dependent on it.

“We will run out of the resource or something is going to stop it at some point. We need to prepare for what happens to the community beyond that point… And I’m not too sure why we don’t manage to prepare ourselves better.” John Halton, Mount Lyell employee

 But people in the region are starting to see that the mine is a finite resource.  

The problem with mining subsidies

Why do governments continue to support such an unviable industry?

Mining companies pay exceptionally low amounts of tax in Australia compared to other nations. While governments may derive some tax income from them, the amount governments are paying back into their pockets through subsides is huge.

It’s long been a case of governments propping up the resources industry at the expense of health, education and other sectors. The QLD and WA government in particular pay hundreds of millions of tax dollars to subsidise mining projects and infrastructure, many of which have been shown to be economically unviable. While subsidies paid by the Tasmanian government are on a smaller scale, they are still at odds with investment in areas like education and tourism.

This contentious issue was highlighted in a 2014 report by the Australia Institute, Mining the Age of Entitlement: State Government Assistance to the Minerals & Fossil Fuel Sector. It found that the Tasmanian government paid $17 million in mining subsidies in 2013-14, the highest ever annual amount, with only $49 million received back in royalties. By comparison, capital investment in education and tourism was $18m and $28m respectively.

Over the entire 2008-14 report period the amount of mining subsidies totalled $54 million, a figure which excludes energy subsidies to the State’s smelters. In addition to generous subsidies the Tasmanian government has also considered deferring royalty payments for new or struggling mines, ensuring that any benefits to the economy are reduced.

Sustainable development of the north west

As one of Australia’s most disadvantaged regions, the people of Tasmania’s north west want employment and do not want to see their entire region locked away into a National Park devoid of economic opportunity.

The resources industry has been a vital part of the local economy for decades but with the end of the resources boom, and the recent closure of a number of mines, it’s vital to transition to a more diverse and sustainable economic model.

Mining can continue to play a part in the region’s development but through responsible use of existing mines and the rehabilitation of old mine sites, not developing new mines in environmentally sensitive areas. It’s been suggested that Tasmania can become a world leader in mine remediation, exporting technology globally.This would deliver jobs long after the mining boom has ended.

“Dealing with the environmental legacy of mining is emerging as a massive global boom industry, and there’s no reason why Tasmania cannot get in the ground floor.” Paul O’Halloran, Greens Mining Spokesman

Agriculture and aquaculture are also poised for huge growth and with the right investment and support, the north west can capitalise on this.

Most exciting is the huge opportunity for growth in the region’s tourism industry. Attaining World Heritage listing for the Tarkine is central to this, as it’s this icon status that will draw visitors not just domestically but internationally, and create employment.

For the Tarkine to be inscribed on the World Heritage list, it needs to be formally put forward to UNESCO by the Australian government. While the development of the sector presents many opportunities, it’s crucial to maintain the integrity of this unique wilderness area and so any large-scale tourism developments should not be undertaken without meaningful consultation with local conservation and indigenous groups.

Most importantly the Tasmanian government must get serious about tackling the low educational attainment levels which underpin youth disengagement in the northwest, and redirecting misplaced mining subsidies is a great place to start.

This article was published in the Australian Independent Media Network on August 25th 2016.

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