Shock horror: mining wages are too high

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by Chris Becker

It’s hard not to stifle a laugh, but then hang your head when you read headlines like this:

 Inconvenient truth: Australian mining wages too high

Japanese trading giant Mitsui says Australia’s lagging productivity fails to justify its high mining wages, while tipping a modest rebound in heavily depressed iron ore and coal prices by the end of the year.

Mitsui Australia boss Yasushi Takahashi stressed the importance of ­executing deeper cost cuts at Mitsui’s Australian operations, which include iron ore, coal, and liquefied natural gas.

“It’s an inconvenient truth but Australia’s high wages are not supported by an equally high productivity,” Mr Takahashi said. “The biggest subject we are tackling right now with our joint venture partners is to improve productivity to match up with high costs.”

He pointed to prohibitive labour costs at Australia’s coal mines.

Labour made up about 25 per cent of on-site coal mine costs in Australia, compared to 10 to 15 per cent in other key mining exporters, like China, the United States, South Africa and Indonesia.

Australia’s average mining wage was $US122,000 ($138,000), more than double that of the US.

“That is a good thing we are seeing high wages in the most liveable country in the world,” he said.

“If that’s sustainable that’s fine. But one concern is, is it really sustainable?”

Imagine if the AUD was averaging say 70c against the USD instead of 90c to $1 these last few years? Counter factual aside, Mr Takahashi will get his wish soon enough, as at least wage growth is falling as job losses mount:

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Mitsui’s position is not one of sniping, but genuine concern about its current investments and possible future investment, particularly in agriculture:

Mitsui is in long-running iron ore joint ventures with both BHP Billiton and Rio Tinto in the Pilbara region of Western Australia and owns 7 per cent in four BHP mines – Yandi, Mt Newman, Jimblebar and Mt Golds­worthy.

The Japanese giant also owns 33 per cent of Rio’s Robe River operations in the region.

It also has a stake of about 7 per cent in the Woodside-led Browse LNG project, also in Western Australia, and is in a suite of coal operations with BHP on the east coast.

Funny how a multi-national can say what the rest of the “mining forever” complex won’t.

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