Author: yinghui

LANDMARK CHINA-AUSTRALIA FREE TRADE AGREEMENT

The landmark China-Australia Free Trade Agreement (ChAFTA) will unlock substantial new benefits for Australians for years to come.

ChAFTA will add billions to the economy, create jobs and drive higher living standards for Australians.

Australian businesses will have unprecedented access to the world’s second largest economy. It greatly enhances our competitive position in key areas such as agriculture, resources and energy, manufacturing exports, services and investment.

Building on trade deals already concluded with Korea and Japan, ChAFTA forms part of a powerful trifecta of agreements with Australia’s three largest export markets that account for more than 61 per cent of our exports of goods.

More than 85 per cent of Australian goods exports will be tariff free upon entry into force, rising to 93 per cent in four years. Some of these goods are currently subject to tariffs of up to 40 per cent.

On full implementation of ChAFTA, 95 per cent of Australian goods exports to China will be tariff free.

Australian households and businesses will also reap the benefits of cheaper goods and components from China such as vehicles, household goods, electronics and clothing, placing downward pressure on the cost of living and the cost of doing business.

Significantly, tariffs will be abolished for Australia’s $13 billion dairy industry. Australia’s beef and sheep farmers will also gain from the abolition of tariffs ranging from 12-25 per cent and all tariffs on Australian horticulture will be eliminated.

Tariffs on Australian wine of 14 to 30 per cent will go within four years, while restrictive tariffs on a wide range of seafood, including abalone, rock lobster, and southern bluefin tuna will also cease within four years.

Tariffs will also be removed on a range of Australian resources and energy products, including the eight per cent tariff on aluminium oxide on the first day of the Agreement, benefitting our exports worth around $1.3 billion a year. The tariffs on coking coal will be removed on day one, with the tariff on thermal coal phasing out over two years.

Tariffs will be also eliminated on a wide range of Australian manufactured goods, including pharmaceutical products and car engines.

The Australian Government has secured the best ever market access provided to a foreign country by China on services, with enormous scope to build on an export market already worth $7 billion.

Legal services, financial services, education, telecommunications, tourism and travel, construction and engineering, health and aged care services, mining and extractive industries, manufacturing services, architecture and urban planning, as well as transport, among others, will all benefit from being able to do business in China more easily.

A key feature of ChAFTA is a built-in mechanism to allow for further liberalisation and the expansion of market access over time, including a first review mechanism within three years. This places Australia in a strong position to secure additional gains as China undergoes further economic reform into the future.

ChAFTA contains investment provisions which will boost and diversify our bilateral investment relationship with China. The Chinese Government estimates total outbound investment of US$1.25 trillion (A$1.44 trillion) over the next 10 years.

ChAFTA will promote further Chinese investment in Australia by raising the Foreign Investment Review Board (FIRB) screening threshold for private companies from China in non-sensitive areas from $248 million to $1,078 million.

Consistent with the promise made by the Coalition at the last election, the Government will be able to screen investment proposals by private investors from China in agricultural land valued from $15 million and agribusiness from $53 million.

Furthermore, FIRB will continue to screen proposed investments by Chinese State Owned Enterprises regardless of value. These provisions are consistent with Australia’s trade agreements with Korea and Japan.

ChAFTA will also contain an Investor State Dispute Settlement (ISDS) mechanism. This will enable Australians to invest in China with greater confidence. The ISDS provisions contain strong safeguards to protect the Australian Government’s ability to regulate in the public interest and pursue legitimate welfare objectives in areas such as health, safety and the environment.

With a view to maximising the benefits of the FTA for business, Australia and China have also agreed to review their bilateral taxation arrangements, including relief from double taxation.

Negotiations for a free trade agreement with China commenced under the Howard Government in 2005 and languished between 2007 and 2013.

China is Australia’s largest two-way trading partner in goods and services (valued at more than $150 billion in 2013), our largest goods export destination ($95 billion in 2013), and our largest source of goods imports ($47 billion in 2013). China is Australia’s largest services export market ($7 billion in 2013).

ChAFTA assures the future competitiveness of our exports. Trade and Investment Minister Andrew Robb and Commerce Minister Gao Hucheng today signed a Declaration of Intent in the presence of Australian Prime Minister Tony Abbott and Chinese President Xi Jinping at Parliament House in Canberra.

Both countries have undertaken to conduct respective legal reviews of the concluded text and prepare Chinese and English language versions for signature in 2015.

 

 

Prime Minister
Minister for Trade and Investment

China agrees to drop import tariffs on Australian resources

China-agrees-to-drop-import-tariffs-on-Australian-resources-657744-l_300
The mining sector has welcomed a new free-trade agreement (FTA) signed with China yesterday; a deal that was 10 years in negotiations which will lift export tariffs and provide for the importation of Chinese labour.

The FTA eliminates all Chinese tariffs on Australian resources and energy products.

Coking coal tariffs in China will be lifted immediately, and thermal coal tariffs will be gone within two years.

With 14 agreements affecting various Australian export industries, the deal is one of the most significant China has ever signed with a developed country, federal trade minister Andrew Robb said.

The new FTA will also allow China to bring skilled labourers to work on major Australian projects.

Robb has insisted this is no different to current legislation.

“It means that if there are no Australian labourers available – and it won’t be labourers, it will be skilled workers – for a particular project, they will be able to apply to get an investment facilitation agreement,” he said.

Labor opposition highlighted that the government has refused to release the full details of the FTA.

Senate opposition leader Penny Wong said the text of the agreement would not be released until after it has been signed next year.

NSW mining said the new agreement will help to underpin future investment in NSW and help to secure jobs.

China accounts for 22 per cent of NSW coal exports, up from 1.1 per cent in 2007-08.

The International Energy Agency estimated that global demand for electricity may double on 2009 levels by 2035, and NSW Mining said coal is forecast to meet than increase in the next five years, over and above oil or gas.

Talk radio shock jock and Liberal supporter Alan Jones criticised Prime Minister Tony Abbott for the deal on air yesterday, criticising the purchasing freedoms the new agreement will allow China in Australia.

“Can Tony Abbott go and buy a farm in China? No, the answer is no Prime Minister, the answer is no he can’t, nor can he buy a coal mine, nor can he buy a steel mill.”

Jones said the new agreement would fail the “pub test” and affect the Liberal party at the next federal election.

Rio Tinto’s new $3.5 billion iron ore mine approved

Western Australia’s environmental authority has approved Rio Tinto’s plan to build a massive new iron ore mine in the Pilbara.

The Koodaideri mine would be located 110 km north-west of Newman and is expected to have a 30 year life span.

According to documents filed by Rio subsidiary Mount Bruce Mining, the mine is expected to produce 35 million tonnes of ore a year, before a ramp up by 2030 which will see that figure increase to 70 million tonnes a year.

The mine would require a new 167 km railway to be built in order to connect the mine to Rio’s Dampier-Tom Price line.

New roads, power sources, water infrastructure and FIFO village facilities would also be need to be constructed.

Up to 2,000 people would be needed to build the mine while 700 workers would be required for the mine’s operation.

The estimated price tag for the mine and rail development is $US3.2 billion ($3.5 billion).

The Environment Protection Authority said the mine could go ahead subject to 14 conditions including measures to protect local bat and quoll colonies.

It also wants to ensure that the mine does not increase the spread of asbestos in the environment.

The proposal is open to a two-week public appeals period before being sent to WA’s Minister for Environment Albert Jacob for final approval.

The EPA’s approval comes one the same day as the price for iron ore hit its lowest point in five years.

Dropping 4 per cent overnight, the commodity is trading at $US72.10 a tonne.

However, with a production cost of just over $US20 a tonne, Rio is shielded from price drops, and plans to expand its exports out of the Pilbara from the current 270 million tonnes a year to 360 million tonnes a year.

A final investment decision for Koodaideri is not expected until at least 2016, as the company focuses on upping production through less expensive brownfield expansions.

Metal-Expo’2014

Metal-Expo’2014, the 20th Jubilee International Industrial Exhibition with 650 exhibitors from 35 world countries was held on November 11-14 in Moscow. Around 30 000 users of ferrous and non-ferrous products from different industry segments including construction, heavy engineering, fuel & energy, transportation & logistics, steel trading, research etc. visited the event. The majority of exhibitors sum up their participation as highly efficient expressing intention to exhibit in the next Metal-Expo event.

BNMME BOOTH

It’s our 7th continuous attending to the Expo. We meet old friends here, and know new friends as well.

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See you next year, METAL-EXPO 2015, in Moscow.

Good signs in residential construction: BlueScope

BlueScope

BlueScope Steel reaffirmed its first half guidance for the 2015 financial year at its AGM yesterday and mentioned that residential construction in Australia was encouraging.

Business Spectator reports that chairman Graham Kraehe told investors that major turnaround initiatives of recent years had begun to pay off. The company’s first half net profit after tax for the 2015 financial year would be similar to the second half of the 2014 fiscal year, which was $89.6 million.

“Other pleasing developments for the year were the $246 million lift in operating cash flow and strong balance sheet with 5.5 per cent gearing at June 30,” said the chairman in a statement.

There was strong demand in new residential developments in Australia, as well as south-east Asian and US trade.

Kraehe mentioned that positive signs existed around initiatives including Zincalume and updates to the Colorbond line, and the integration of the acquired Fielders, Orrcon and Arrium sheet and coil businesses.

Read more at http://www.ferret.com.au/articles/news/good-signs-in-residential-construction-bluscope-n2519051#3xL0Bb65c9a2fEq4.99

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Automated haul trucks coming to NSW （无人驾驶矿山车）

BHP will be looking at the prospect of trialling automated haul trucks at the Mount Arthur coal mine, a decision that will be finalised in the next 12 months.

If implemented, this would be the first trial of autonomous mining haul trucks in NSW, which was flagged by BHP coal boss Dean Dalla Vale early this year.

BHP has already been testing driverless haul trucks at their Jimblebar iron ore mine in Western Australia for more than 12 months, and will soon ramp up the fleet from nine to 12 trucks.

A BHP spokesperson told Australian Mining Mt Arthur is on the cusp of beginning an identification study into the requirements of such a trial, such as examining potential suppliers, equipment, and equipment modifications to suit the mine.

The identification study will be completed by the end of FY15, after which BHP Mt Arthur will determine whether to proceed with the trial.

“If a decision is made to go forward with a field trial, the autonomous truck project would be conducted by a dedicated project team in an area of the mine pit separate from main operations,” the spokesperson said.

“No decision has been made, but we will continue to keep our employees updated.”

***

The Planning and Assessment Commission recently approved an extension of the Mt Arthur coal mine operations until 2026, on the grounds that it would facilitate employment of up to 2600 workers, Newcastle Herald reported.

NSW member of the legislative council for the Greens Jeremy Buckingham said the prospect of a new trial indicated “the absolute hypocrisy of these multinational coal companies”.

“They use the spectre of job losses to demand mining approvals, while at the same time act to implement measures that cut employment,” Buckingham said.

Last week Mt Arthur announced 150 jobs at the mine would be cut, bringing the number of redundancies at the mine to 500 for the past 12 months.

Mt Arthur currently runs four crews of haul truck drivers, with 80 trucks operating each shift.

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If you have a weather-related blog, this is the perfect sidebar addition for you! Bloggers who aren’t weather-focused might also enjoy letting others know when an umbrella is needed, especially those who write about the area they live in.

Iron ore race to the bottom not in the interests of Australians

The world’s biggest iron ore producer, Vale, has announced its intention to expand production despite a falling price. This follows similar announcements by Rio Tinto and BHP.

This expansion in production by the three largest iron ore exporters in the world, accounting for over 60% of the market, is puzzling and it may not be in the best interests of the resource owners in Western Australia and Australian taxpayers generally.

Why would firms pursue such a strategy? Western Australian Premier Colin Barnett has suggested the big miners may be flooding the market to reduce the price and drive higher-cost suppliers from the market.

Indeed, Vale’s CEO has indicated the objective is to displace competitors’ quantities. This is plausible as there are many producers that are marginally profitable at current world prices. They will likely exit the market if prices are reduced further.

Given the big miners’ market share, it stands to reason that higher production volume will have a negative impact on iron ore prices. Perhaps the big miners hope that once higher cost producers exit the market, prices may rise again.

However, there many reasons to suggest such a view is too simplistic and this strategy will not work.

Crucially, iron ore production is by and large a mining and extraction activity. This means underground resources do not disappear if a high-cost miner exits the market. Equally, once resources are mined, extracted and sold at a potentially low price, the resources are gone and its owners will not be able to enjoy future higher prices.

It may make sense for the big miners to ramp up production now, despite causing a reduction in prices, if there are particular reasons to believe the demand for iron ore will decrease in the future. If this were the case, then it might be better to sell now, even if at reduced prices, vis-à-vis selling in the future at even lower prices. But this is unlikely given that many countries in Asia, Africa and South America will still need steel to catch up to the level of development of richer countries.

Is this just supply and demand at work? Is it a case of lower-cost producers vying for larger market shares even if this happens at the expenses of these companies’ shareholders? Unfortunately this ignores the interests of those who own the resources.

Iron ore resources are owned by the state (that is, by the people). The economic rents – the income derived from the ownership of a resource that exists in fixed supply – are captured in two different ways in Australia.

The Western Australian government charges (ad valorem) royalties on the value of iron ore sales. By increasing production, causing prices to fall, the big miners’ action will affect the value of the royalties captured by the government. Even if the big miner’s revenue rises due to quantities rather than prices, royalties may still fall if other Western Australian producers exit the market.

Similarly, Australians at large benefit from the tax revenue collected by the federal government. As the corporate tax is levied on accounting profits, lower iron ore prices may mean lower tax revenue as well.

Again, even if prices increase in the future, Australian governments will not be able to fully capture additional revenue as many high-cost producers are located in other jurisdictions.

Mining companies own capital that can be driven harder, as well as owning the mining rights. Managers may be tempted to increase production and enjoy a higher return on capital even at the expense of not maximising the value of the resource over the life of the mine.

The public, however, captures the value of the resources through ad valorem royalties and the corporate tax system. This means the public would benefit from actions that maximise the value of the resources over the life of the mine.

The challenge for the big miners is how to overcome this temptation of any short-term gains from increasing production to capture market share, at the expense of reducing prices further, resulting in a reduced value for the resources over the life of the mine. The challenge for governments, on behalf of the resource owners, is to continue to challenge the big miners’ thinking as Premier Barnett has done.

The Conversation

Flavio Menezes does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

This article was originally published on The Conversation. Read the original article.