Australia’s mining industry is voicing concerns over what they perceive as growing sovereign risk due to recent government policies. One of the world’s largest mining companies, BHP, has been vocal in its opposition to the Australian government’s “Same Job, Same Pay” legislation. This policy mandates that companies pay labor hire workers the same as their more experienced counterparts, which BHP argues would raise costs without any gains in productivity.
The legislation, aimed at creating fairness for workers, has raised worries among industry leaders. In BHP’s latest financial results for the 2024 fiscal year, the company noted that “regulatory changes underway in Australia will increase our labor costs and decrease the international competitiveness of the Australian economy.”
BHP CEO Mike Henry, speaking to reporters, emphasized the uncertainty these regulations create. “We’ve always been strong advocates for linking wage increases to productivity increases,” Henry said. “Our concerns around some of the recent changes are that they result in increased costs with no corresponding positive impact on productivity.”
The new industrial relations laws have sparked efforts to unionize Western Australia’s large mining workforce. Should these efforts succeed, Henry warned that it could impact potential future expansions in the iron ore sector. The industry’s concerns extend beyond immediate costs to long-term investment prospects in the country.
Recently, Australian Environment Minister Tania Plibersek vetoed the tailings dam for Regis Resources’ proposed McPhillamys gold development in New South Wales. This $680 million project had already obtained state approval and federal environmental clearance. However, the veto rendered the project financially unviable, resulting in a significant financial loss for Regis Resources. The decision has been viewed by many in the industry as unexpected and a potential indicator of a more challenging regulatory environment in Australia.
Regis Resources Managing Director Jim Beyer expressed his frustration, stating that the company had every reason to believe their project would proceed. “Regis had every confidence that from a regulatory perspective, McPhillamys was an approved project with no significant obstacles from a government standpoint,” Beyer told analysts. He noted that the declaration by Minister Plibersek came as a surprise and did not align with previous government actions, especially considering the extensive investigations into Aboriginal cultural heritage issues that had already taken place.
Industry groups quickly condemned the veto, seeing it as a unsettling sign of increased regulatory unpredictability. The Australian mining industry, already shaken by the decision, has raised the issue repeatedly during the country’s reporting season. BHP, among other companies, has emphasized the need for more regulatory certainty to maintain Australia’s attractiveness as a stable investment destination.
“When companies like BHP make decisions, you’re looking for the best risk returns and profile,” Henry said. “Any uncertainty in permitting or other policies will become a drag on investment.” He added that while BHP supports policies related to cultural heritage protection, the investment community needs as much certainty as possible to enhance investment attractiveness and competitiveness.
Stuart Tonkin, Managing Director of Northern Star Resources, echoed these sentiments, emphasizing Australia’s reputation as a stable place to invest. However, he warned that slow regulatory changes could diminish this appeal. “Every slow change like this just takes away some of that shine,” Tonkin said. “If Australia is not sitting up there as a great jurisdiction to invest in, the capital goes to different countries.”
Concerns have even spread to companies operating outside of Australia. Patriot Battery Metals, a company developing a lithium project in Quebec, faced questions from Australian investors about whether a similar regulatory situation could occur in Canada. CEO Ken Brinsden expressed confidence that it could not but was surprised that the issue had become such a significant concern. “It’s hard to believe we’re having this conversation in Australia,” Brinsden remarked.
The industry is also preparing for additional regulatory changes under the federal government’s ‘Nature Positive’ reforms. These include the establishment of a national Environmental Protection Agency (EPA) to complement existing state and territory EPAs. The government has promoted the new EPA as a “tough cop on the beat,” with powers to issue stop-work orders and conduct proactive audits.
Industry groups have warned that this could lead to duplicative regulations, increasing both the cost and time required to approve new projects. Tania Constable, CEO of the Minerals Council of Australia, criticized the policy, arguing that it would not improve environmental outcomes. “The environmental policy is just an absolute joke in Australia,” Constable said. “I’m failing to see what a national EPA is going to add in terms of making sure that we get a better environmental outcome when we’ve got state EPAs out there.”
Whitehaven Coal’s Managing Director, Paul Flynn, also voiced concerns over the increasing regulatory burden. He described the recent veto of the Regis Resources project as just one of many policy issues causing anxiety in the industry. “There are a whole range of policy issues which are causing concerns for the industry,” Flynn noted, highlighting the broader impact of these changes.
