Henry VI, Part One, Act 1, scene 4
Given that I have been critical of the lack of Indigenous
engagement with the North Australia Infrastructure Fund (NAIF) – see my
previous post here – I was pleased to
learn that the NAIF has recently approved a $12.5m loan to and Indigenous
mining project. The project is based on an orebody known as Wonmunna (since
renamed First Iron) purchased from Fortescue mining in 2018, and will involve
the sale of iron ore to Fortescue Mining Group (FMG) and its transport to FMG’s
Cloudstreet project under an agreement entered into in 2017 (link here).
On 19 September, Minister Canavan announced NAIF support
for an Aboriginal owned mining project in the Pilbara (link here). The
Australian Aboriginal Mining Corporation (AAMC) will operate the project, based
on two small deposits close to the BHP’s Yandi and West Angelas mines and the Rio
Tinto Yandicoogina and Area C mines in the Pilbara. See the map in this
National Indigenous Times article on the project (link here).
AAMC is privately owned by 21 shareholders. AAMC has 51%
beneficial Aboriginal ownership with Aboriginal owned Carey Mining owning 25%
and traditional owners of the areas to be mined apparently making up some or
all of the balance of Indigenous owned equity (link here).
Carey Mining is the largest shareholder in AAMC. It is owned and managed by
Daniel Tucker, who is also the Chair of AAMC. Tucker is also a member of the
Prime Minister’s Indigenous Advisory Council.
The AAMC media release (link here)
provides the most detailed information on the overall project. The NAIF funding
will be complemented by a $14.6m facility from Westpac, and the balance of
capital required will be obtained through an equity raising exercise.
On its face, this is all good news and represents a
positive step forward for Indigenous interests in the Pilbara and more
generally.
It also represents a small window into a much larger political,
economic and policy realm where private interests and public sector policies
(especially Indigenous related policies) intersect and interact. Much of what
is occurring in this domain is cloaked by the limited public information
available in relation to private sector and commercial activity and contractual
agreements (particularly where the interests involved are not publicly listed
corporate entities). Thus, it is clear that Indigenous interests have been
major financial beneficiaries in the resource development boom in the Pilbara
(and other parts of WA and Qld) over the past two decades. However, policymakers
and indeed the public at large, have very little information regarding the
quantum of funds flowing to Indigenous interests, the nature of the
non-financial provisions in the agreements that are being entered into, and
indeed the fairness and probity of the negotiation processes that have taken
place and are underway.
Of course, it is arguable that these are not matters for
government, and the market ought to be allowed to do its job. The counter
argument is that these outcomes are a direct result of the operation of
Commonwealth (and to a lesser extent, state) legislation, in particular the
Native Title Act, and governments have a responsibility to ensure that the
outcomes of legislation are consistent with broader societal expectations.
Indeed,
if we were to conceptualise the role of government as a manager of societal
risks, then, one might make an argument for much greater transparency by both
commercial and Indigenous interests in relation to the outcomes of their
negotiations over land use and resource development. Potential risks include
unforeseen adverse environmental consequences, the implications of mines not
being effectively remediated after their closure, and the implications of high
levels of income and wealth inequality within Indigenous communities, to
mention just a few potential examples. Unfortunately,
governments tend not to see themselves as societal risk managers, but rather
operate within ideological frames focussed on ‘development’ or ‘jobs’. While
economic development, growth and jobs are worthwhile objectives, they ought not
to be pursued at all costs, without a clear assessment of the societal risks
embedded within.
In the present case of the AAMC First Iron project, a range
of questions remain unanswered. While one Indigenous shareholder has been
identified, the balance of the Indigenous ownership remains shrouded in
mystery. In the absence of this information, it is not possible to be entirely
confident that Indigenous interests ‘control’ the policies and decisions of
AAMC (notwithstanding its name and the majority beneficial ownership). A second
set of unanswered questions relate to AAMC’s relationship with FMG, which
itself has a somewhat chequered history of involvement with Indigenous
interests (link here and here). It seems likely that
at least from FMG’s perspective, the arrangements with AAMC are more than
commercial and play into the complex commercial competition between the major
miners (BHP, Rio, and FMG) in the Pilbara. Of course, this is not necessarily a
negative factor for Indigenous interests, but it makes assessing the merits of
the AAMC project that much more opaque.
Finally, while the decision by NAIF to assist an Indigenous
commercial project is welcome, it is worth bearing in mind the scale of this
decision. NAIF has $5bn available for lending, so the $12.5m loan represents
around 0.25 percent of its funds. There remains a long way to go if NAIF can be
said to be addressing the infrastructure needs of northern Indigenous
communities equitably. This decision is at least a start.
Stepping back to a more panoramic viewpoint, this decision
represents just one rather narrow and opaque window into the complex and
heterogeneous ways in which mainstream interests and institutions engage and
interact with Indigenous Australia. In an environment where governments are
increasingly focussed on Indigenous policy narratives built around the economic
development opportunities of Indigenous communities and citizens, the sheer
opacity of this window is emblematic of a deeper structural problem. Policymakers
(and commercial interests) spruik individual events (such as the NAIF loan and
the start up of the First Iron mine) as policy successes without themselves
having any idea or understanding of the totality of the social, cultural and
economic consequences both positive and negative of these events.
The normal
approach of policymakers to managing this policy ignorance is to initiate an
inquiry or review when a serious problem emerges. A better, more proactive, and
potentially preventative approach would be to focus policy resources on
increasing the transparency around commercial activities. This is particularly
justified for those interests receiving publicly sourced financial assistance
whether in the form of tax expenditures or write-offs, and concessional NAIF
loans and the like. To take just one example, it is extraordinary that
taxpayers do not have low cost or free access to the publicly available
corporate records held by ASIC. In relation to NAIF, there is a range of
matters that might usefully be placed on the public record once decisions have
been taken (I made a number of specific suggestions in an as yet unpublished
submission to this Senate Inquiry: link here).
Where commerce and policy intersects, sunlight is
invariably a cheap and effective contributor to managing societal risk!
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