Speech - Keynote Address, Stockbrokers Association of Australia Conference

Stockbrokers Association of Australia Conference - Wednesday, 9 June 2010 - Crown Promenade, Melbourne - by Mitchell H Hooke Chief Executive Officer, Minerals Council of Australia

I’d like to acknowledge the Traditional Owners on whose land we meet, the Kulin Nation, and pay my respects and those of the Minerals Council of Australia to their elders and their ancestors.

Chairman, Mr Rob Thomas; Managing Director and CEO, Mr David Horsfield; distinguished guests, members of the Stockbrokers Association of Australia, ladies and gentlemen.

David Horsfield extended this invitation to me early in November last year to talk about the Government’s carbon pollution reduction scheme.

I questioned the merit of giving a speech that would address the policy and technical manifestations of that debate and that would probably drive an audience like this either to sleep or to distraction.

Rather, I considered then, as I do now, that the Government’s construct of that policy proposal and the subsequent fierce public debate went to the very core of an emerging uneasiness [at least within business circles] of increasing sovereign risk of doing business in Australia, whether that is actual or perceived.

By sovereign risk I mean the extent to which Governments’ intervention in the market is unwarranted, unexpected, changes the rules upon which investment decisions were made, and that the process of those policy determinations is manifestly flawed.

The mining industry is a global industry – it is capital intensive with considerable and high risk exploration outlays, large upfront capital commitments, long life assets, seriously technologically challenged and sophisticated, with long lead times to profitability, and its capital, people and technology are highly globally mobile.

The industry understands risk management for market uncertainty in a highly volatile, highly competitive global market.

Our confidence in the underlying fundamentals of this cycle of minerals demand has been vindicated – we said throughout 2009 that the demand cycle was checked, not compromised by the global financial crisis, and that demand would kick back to and exceed supply, putting upward pressure on commodity prices.

The industry has a solid track record of managing its way through economic cycles.

 

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