WA resource giants biggest challenges for 2023

With a firm target for 2030, emissions are now a zero-sum game and any concession to one sector is a burden on another, so behind-the-scenes lobbying must be intense.

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So far, the emission limit values ​​for industry in the federal government’s security mechanism were set so high that no change was achieved.

By mid-2023, every large facility will have an emissions reduction path heading towards net-zero by 2050, and failing that, lending companies will have to buy credit from facilities that have reduced emissions more than needed, or buy carbon offsets.

Companies that planned to buy carbon offsets rather than reduce emissions – basically paying others to do activities like planting trees – will face higher costs than they planned after Bowen suggested using much cheaper international credit had ruled out their credibility for at least several years due to concerns.

What remains are the more expensive Australian Carbon Credit Units, which could well continue to rise in price once an integrity check is complete.

In WA, the only Australian state with rising emissions, the new carbon pollution regime will severely impact the speed at which industry invests in decarbonization and the viability of new gas projects.

Culture: Indigenous people and workplace failure are forcing change

WA’s resource sector is full of responsible corporate citizens using the world’s best practices, or at least they tell you so, until the opposite is revealed and the resulting excitement weakens their vise-like grip on governments long enough for change to occur.

The state’s miners and oil and gas producers now face the twin challenges of preserving ancient Indigenous culture while eradicating some vile behaviors in their own work cultures.

A WA parliamentary inquiry into sexual harassment of women at fly-in fly-out sites revealed horrifying complaints of discrimination and sexual assault. Independent reports commissioned by Rio Tinto and Chevron provided further details on the abuse of women, racism and bullying suffered by workers of both sexes.

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So-called psychosocial hazards such as sexual harassment and mobbing are added to state occupational health and safety regulations.

Unlike concerns about workplace harassment, Rio Tinto’s destruction of the Juukan Gorge in May 2020 was not enough to force the state’s Labor government to significantly strengthen the power of traditional owners when it passed its 2021 Legacy Laws Native American revised.

But Federal Environment Minister Tanya Plibersek has promised to strengthen federal legislation to make traditional owners the “prime decision-makers” for projects on their land and strengthen powers to override state permits.

It will be a big change for WA miners that in the 12 years under the previous state legislation, 99.6 percent of their requests to destroy Aboriginal heritage were approved.

Plibersek did not wait for new laws. In September, it commissioned an independent report to determine whether more than a million ancient rock carvings on the Burrup Peninsula — or Murujuga for its traditional custodians — home to Woodside’s two liquefied natural gas export facilities and other major emitters adjacent industries are threatened .

The rocks in Murujuga National Park have more than a million rock carvings, but industry could threaten them.

The rocks in Murujuga National Park have more than a million rock carvings, but industry could threaten them. Credit:Getty

In doing so, she has taken up an issue that the state government is resolutely trying to solve internally with its Murujuga rock art strategy.

Until Plibersek receives the report and responds to it, there is a question mark over any new investment in the Peninsula, which is the heart of WA’s gas industry.

Chaos: Workers, contractors, supervisors, all pushed to the limit

While many of the feasibility studies on $147 billion projects listed by the Department of Industry, Science and Resources in December will not result in investment, only a fraction of that number will overwhelm the state’s ability to execute projects .

A shortage of Environmental Protection Agency staff to review new projects is already slowing approvals, though half the compliance team is tasked with that task rather than ensuring ongoing projects meet their environmental codes.

With a permit in hand, WA’s miners and gas producers next need a contractor to build their projects, and gone are the days when contractors took the most risk to win the job. No contractor wants to be the next clough to fail due to cost escalation on projects they’ve completed at a fixed price.

Building a project on time and on budget has become more difficult due to the disruptions COVID has inflicted on global supply chains and labor supply.

Volumes of goods from China and raw materials to China had been increasing before the current COVID outbreak. Treasurer Jim Chalmers said on Monday the disruption would get worse before it got better and was a key risk to Australia’s economy in 2023.

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Labor in WA will remain tight as the state government forecasts unemployment to hover at a low four percent by mid-2025.

The resource labor market is also being disrupted by the federal government’s plan to pay contract workers the same as direct employees.

Labor hiring began with casual workers who paid a premium for short-lived tasks like maintenance. It degenerated into a ruthless business that employed large numbers of low-paid workers with few benefits in running roles. The employment agency took its cut and the resource company washed itself out of the dirty business of employing people.

The lack of job security put agency workers at greater risk of workplace bullying, fearing that any complaint would jeopardize their employment.

The business model of hiring labor is already in decline as resource actors realize that in a capital-intensive business it is wiser to develop workers to run their operations at maximum efficiency than to treat them collectively as just another cost to bear lower applies.

Workers have had their strongest bargaining power with employers in decades, and resource companies will focus on recruitment and retention, not thrift.

Bringing the resources WA has locally to the international markets that need them will require an increasingly sophisticated approach. Shortcuts will backfire if major customers are willing to pay a premium for materials that are ethical and environmentally responsible.

Huge sums of money can be made in a boom, but one wrong decision can result in a loss of fortune.

Success requires a thoughtful strategy of selecting the right investments, followed by excellent project execution and the right development of commodity markets.

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As the Chinese, who buy more than half of WA’s exports, would say, “May you live in interesting times.”

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https://www.smh.com.au/business/companies/chaos-culture-climate-wa-resource-giants-three-challenges-for-2023-20221227-p5c8ze.html?ref=rss&utm_medium=rss&utm_source=rss_business WA resource giants biggest challenges for 2023

Brian Lowry

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