It’s great to be here tonight talking about mining and resources, something that has been so important in the development of both Victoria and Australia.

When first elected to federal Parliament to represent the interests of both the seat of Goldstein and Victoria it made me reflect on what the state’s key strengths were.

I came up with:

  1. 500 years of brown coal
  2. Port of Melbourne
  3. agriculture
  4. education and our
  5. medical research capacity led by centres like Walter and Eliza.

Victoria and coal

The provision of affordable electricity was a foundation stone of Victoria’s manufacturing-led prosperity in the 20th century.

Yet despite the critical part played by the coal of the La Trobe Valley, it is a resource that is often demonised, particularly by those who oppose growth and development.

They say that demand for cleaner forms of energy will eclipse coal.

The implication here is that coal is a commodity of the past, not the future.

This is an unduly pessimistic and indeed naïve view of the role of coal, now and into the future.

If we’ve learned anything in the mining industry through all its cycles, it’s that you can never be sure whether a resource has had it or not.

Just because it may not be feasible or economic to develop a mine at a particular point in time – it doesn’t mean it will always be that way. Look at some past examples observed by eminent Australian historian Geoffrey Blainey in his celebrated work: The rush that never ended:

  • Broken Hill’s zinc ores were largely worthless until flotation was developed to separate the ores from the dross.
  • Mt Isa was thought a marginal (though large) zinc-lead orebody until the secrets of its giant adjoining copper orebody were unlocked.

And yes, in addition, Brown coal in Victoria had little value until technology and social developments combined to make it a valuable resource. And we shouldn’t be so arrogant to say that we can predict the future with certainty:

  • We would have been alarmed if told in 1970 that wool would no longer be in our top five export industries within our lifetimes.
  • Who would have predicted in 1980 that before the decade was out, communism would have collapsed in the USSR and China was turning to capitalism for growth, with enormous implications for Australia’s future prosperity?
  • Who would have thought only a decade ago that, by 2017, Australia will surpass Qatar as the world’s largest exporter of LNG, and be a petro-superpower – with a big contribution from unconventional gas fields of coal seam gas?

These themes of transformative change – driven by both technology and social developments - have occurred time and again in Australia’s economic history.

In 1900, Australia was utterly self-sufficient in energy – through firewood, horses and coal.

We met all of Australia’s coal needs – for trains, ‘town gas’ and electricity generation - from the NSW coal fields, and Victoria was dependent on NSW for its coal supplies to generate electricity.

Indeed, at the turn of the 1900’s, Australia was exporting black coal from NSW as far as Chile.

Yet by the 1930’s, Australia was running a large trade deficit as we imported a lot of energy from abroad:

  • The rise of the motor car and tractors drovelarge increases in demand for petroleum, of which Australia produced none.
  • NSW Coal had largely ceased exporting, even interstate. Victoria had been forced to move away from NSW coal as it developed a reputation as an unreliable supplier, with militant unions on the coal fields regularly striking, exacerbated by maritime union action and the introduction of cabotage rules forcing up the price of interstate shipping.

Victoria turned to brown coal from the LaTrobe Valley after World War 1, with the driving role played by Australia’s celebrated Field Marshal Sir John Monash.

His leadership of the State Electricity Commission of Victoria, importing new technologies from Germany, made it economic to consider using LaTrobe Valley brown coal for power generation.

But the loss of NSW’s reputation as a reliable energy supplier was a key push factor too. Victoria was developing a large manufacturing base, and it could not risk a lack of reliable electricity supply due to an interruption of NSW coal imports.

The first electricity from the LaTrobe Valley brown coal fields was sent to Melbourne in 1924, ending Victoria’s reliance on NSW coal for electricity.

After the Second World War, Victoria formed the Gas & Fuel Corporation of Victoria, to develop gas supplies state-wide and reduce Victoria’s reliance on strike-prone NSW black coal for gasification.

In 1956, the Morwell brown coal gasification plant opened using the German-imported Lurgi process to supply coal-derived town gas to Melbourne via pipeline.

Over time, most private companies supplyinggas were folded within the Gas & Fuel Corp, starting in 1951 with the takeover by the State of Victoria of the Metropolitan Gas Company and the Brighton Gas Company in my own electorate of Goldstein. Some of you might remember the old gasometers dominating the skyline in Highett.

Australia’s place as a resources investment destination

My point for this quick gallop through Victoria’s history of its coal resource development is this – Australia’s reputation as a reliable supplier of low cost resources and energy is something we must continue to nurture, or our customers will diversify away from us.

NSW’s exports of coal largely dried up as result of the factors noted above, and didn’t return in scale for nearly 50 years. Australia’s status today as the world’s pre-eminent, ultra-reliable supplier of resources to fuel Asia’s growth, 24/7, 365 days a year, was the result of lessons hard-learned and good reputations subsequently hard-won back.

Coal remains a pillar of the Australian economy. It is our second largest export earner, generating around $40 billion of export earnings, supporting 200,000 jobs directly and indirectly.

It serves as the bedrock of our electricity supply as the fuel source for over 70 per cent of our electricity. And of course it’s the fuel for around 40 per cent of all generation worldwide.

Australia also has the world’s fourth largest share of proven coal reserves, with over 100 years of black coal reserves and as noted earlier 500 year of brown coal reserves.

An ore-body of course doesn’t develop itself. Resources only become technically viable to develop when innovation-driven supply-side opportunity meets the right demand-side driven pricing. And they only become economically viable when this occurs in an environment that positively encourages investment and growth.

The Abbott Government understand this. It’s reflected in our efforts to remove restrictive and unnecessary burdens, by repealing the carbon and mining taxes. And by reducing the cost of doing business through cutting red and green tape and streamline approval processes.

Our Government knows we are in a very competitive environment to attract foreign capital to develop our resources.

We understand that the relative fortunes of large ore-bodies rise and fall. It depends on the cost structures of rivals. It depends on social licence and ease of doing business. It depends on taxes. And it depends upon developments in technology.

Future opportunities

No one can rule out the discovery of innovative technologies that will make for cleaner or clean burning of coal – billions of dollars around the world is being spent trying to develop a commercially viable use of CO2.

CSIRO has already published research showing that the potential exists to reduce emissions from Victorian brown coal by between 30 to 50 per cent.

Nothing would do more to reduce Australia’s emissions than such a technology as the Direct Injection Carbon Engine. Nothing would be more inline with the long Australian tradition of using new technology to make the most of our resources.

No one can rule out policy changes that may favour our resources over others, such as China’s moves to preference lower sulphur, lower ash coals – something that will relatively advantage Australia compared to rival coal exporters.

We also have to recognise that demand for affordable energy in developing economies like India and China will continue.

This is despite their clear recognition of the need for a diversified energy mix including nuclear – witness India’s signing of a Uranium deal with Australia a couple of weeks ago – and renewables.

India is the world’s third-largest consumer of coal and 44 per cent of its total energy is sourced from it.

Indian company Adani’s massive Carmichael project in Queensland’s Galilee Basin – opening up an entire new mineral province for the first time in 40 years – is evidence they are in coal for the long haul.

China’s energy mix is still running at about 68 per cent coal.

In the United States, technological developments in shale oil and gas have helped to drive a manufacturing renaissance by providing more affordable energy.

And I suspect Australia stands close to surfing a similar wave of opportunity from the development of our own shale gas fields, starting with the Cooper Basin.

Today in Victoria’s Latrobe Valley, we see projects exploring new uses for brown coal, such as one that could produce hydrogen for fuel-cells in a joint venture with Kawasaki Heavy Industries.

There are other high-value, non-energy uses being investigated such as fertilizer feedstock, carbon fibre and carbon semi-conductors.


Some of these applications may not work out, but coal’s long association with innovation suggests that others will.

It is important to be patient and take a long-term view because the utility of our large resource deposits changes over time.

It would be unwise to foreclose on the possibility of novel applications by locking away an important reserve now.

This would preclude generations to come from using it in a way that suits the economy at that time.

Instead of thinking brown coal’s day has passed, we need to bear in mind its potential to support new industries and jobs in the future.

This Government is working hard to provide the soundest possible operating environment for business, allowing it to continue to innovate and succeed in a way that will make this possible.

And in turn, I thank the industry for your efforts to achieve that end.

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