TPP WILL OPEN UP NEW MARKETS FOR AUSTRALIA’S $175 BILLION MINERALS INDUSTRY

The Minerals Council of Australia welcomes the release of the negotiated text of the Trans-Pacific Partnership (TPP) agreement, which will open up new markets for Australia’s $175 billion minerals industry.

The TPP will liberalise trade and streamline investment rules between 12 countries, which currently represent around 40 per cent of the global economy and a quarter of world trade.

98 per cent of tariffs will be eliminated and Australia will have a free trade agreement with Canada, Mexico and Peru for the first time. 

Close to 30 per cent, or almost $47 billion, of total Australian exports of resources and energy products in 2014 were exported to TPP countries.

The TPP locks in the duty and quota-free access Australia currently enjoys into a number of TPP markets for major minerals exports including coal (worth $12.8 billion a year) and iron ore (worth $8.4 billion a year).  Peru’s tariffs on iron ore, copper and nickel will be eliminated by the agreement.

The TPP will also benefit Australia’s $90 billion Mining Equipment, Technologies and Services (METS) sector.  Over 50 per cent of METS companies export their goods and services, with current exports exceeding $27 billion or approximately 30 per cent of the sector’s revenues.

The TPP will eliminate tariffs of up to 15 per cent on Australian exports of mining equipment to Mexico, and will bind tariffs at zero in countries where Australian exports already have duty-free access.

Brunei, Mexico and Vietnam have made specific new commitments guaranteeing access for Australian METS companies, while Chile, Mexico and Peru have made commitments on the provision of consulting, research and development, engineering, environmental, mining and technical testing and analysis services will deliver greater certainty of access regarding access.

The TPP also seeks to reduce discrimination against Australian mining and METS companies when dealing with or competing against state-owned enterprises.

The TPP opens up new exploration, extraction and production opportunities for the Australian minerals industry, including:

  • Mexico allowing foreign companies to participate in Mexico’s energy sector for the first time
  • Canada allowing Australian investors to apply for an exemption from the 49 per cent foreign equity limit on foreign ownership of uranium mines, without first seeking a Canadian partner
  • Vietnam opening up its mining regime and providing greater certainty about its screening mechanism for prospective investments
  • Brunei Darussalam and Malaysia making first-time commitments on investment in the mining sector, including coal
  • Prohibitions on the introduction of new export taxes and commitments for the elimination of existing export taxes in Malaysia and Vietnam.

The TPP will facilitate the injection of capital and technology into the Australian minerals industry by raising the foreign investment screening threshold (except for uranium-related activities) from $252 million to $1,094 million.

Further, Australian companies will be able to transfer executives and managers more easily to work in TPP countries for extended periods and to obtain visas for Australian temporary contractors.

The Australian minerals industry urges early signing and ratification of the agreement and congratulates the remarkable efforts of Minister Robb and his negotiating team.

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