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Keep it in the regions: mining and resources industry support for businesses in regional economies

3 Dec 2018

In June 2018, the Minister for Resources and Northern Australia, Senator the Hon Matthew Canavan, asked the Committee to inquire into and report on how the mining sector can support businesses in regional economies.

The Committee was asked to consider questions including:

  • The appropriateness of the payment terms offered to businesses by the mining sector;
  • Best practices between the mining sector and businesses, especially in regards to how they can support regional communities and economies;
  • Barriers to the greater use of regional businesses in the procurement of services by the mining sector;
  • Building the skills and expertise of businesses to leverage opportunities in the mining sector;
  • Opportunities for businesses to diversify to other markets; including the mining industry in Australia and overseas, and across different industries;
  • The role of mining equipment, technology and services (METS) organisations in R&D and innovation and how payment terms impact on companies' ability to invest in these areas;
  • How the Federal Government can support businesses in regional economies benefit from mining development;
  • How royalties are shared between landholders on gas fields and State and Territory Governments; and
  • Any other related matter.

The report includes a list of recommendations, this introduction, and six substantive chapters that address the terms of reference. The six chapters represent the issues that rose to prominence during the course of the inquiry.

The introduction explains the conduct of the inquiry and contextualises the report with a summary of mining activity in Australia.

Chapter 2 looks at the question of ‘what’s in it for the regions?’ Specifically, how regional areas benefit from mining and what the negative impacts can be. It also looks at royalties, including ‘Royalties for Regions’-type programs, and presents a case study about mining returns to the Pilbara, Australia’s most productive mining region. The chapter presents recommendations aimed at increasing the share of wealth that goes back into the regional communities where the resources are mined.

Chapter 3 discusses the local procurement policies and practices of big miners, barriers to local procurement, and recommendations for increasing the use of local suppliers by mining companies in regional areas.

Chapter 4 summarises the significant amount of evidence the inquiry received on mining company terms of payment, contract provisions and contracting practices. It considers the responses of mining companies and makes recommendations for reform.

Chapter 5 looks at innovation and technology, skills and training, and diversification within the industries that service the mining sector. It considers skills shortages in regional areas, the opportunities offered by adopting a ‘clustering’ model, and opportunities for businesses in miningdominated regions to diversify.

Finally, Chapter 6 investigates the issue of mining companies’ social licence to operate. This final chapter analyses miners’ use of fly-in/fly-out (FIFO) verses local workforces and mining’s interaction with agriculture and landholders. The chapter ends with recommendations for enhancing mining companies’ social licence to operate in regional communities in Australia.

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