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Published 18 February 2013 11:09, Updated 19 February 2013 07:34
Gina Rinehart’s Roy Hill project needed the deal to prove it could provide a secure labour stream as it sought to lock in debt funding. Photo: AAP
Gina Rinehart’s Roy Hill iron ore project no longer needs the 1700 foreign workers it applied for under the first of the federal government’s enterprise migration agreements.
Executives working on the $9.5 billion project, which is majority owned by Mrs Rinehart’s Hancock Prospecting, say the labour market has cooled sufficiently to source all 8000 construction workers needed locally.
“Recent detailed market research and contractor feedback indicates that under prevailing economic conditions we should now be able to secure our construction skills requirements within Australia,” manager Darryl Hockey said.
Roy Hill was the first company to be awarded one of the Gillard government’s controversial EMAs, allowing it to bring in up to 1715 workers for the construction phase of the project after labour market analysis showed there would be a significant shortfall.
The announcement created unrest within the Labor caucus and prompted a strong campaign from unions, including a rally that marched on the Perth office of Hancock Prospecting.
Mr Hockey said the company was in the final stages of negotiating the EMA deed with the government after 18 months and would still complete the deal as a “safety net”.
“Although the approved EMA is unlikely to be activated at this stage, as insurance for future labour market changes it makes good sense to continue to work collaboratively with the government to finalise the EMA deed,” he said.
The EMA was a way for Roy Hill to prove it could provide a secure labour stream as it sought to lock in $4 billion in debt funding from international providers. The delay in finalising the complex finance mix, including export credit agencies and up to 20 banks, pushed the project’s start date out by about nine months. Funding is expected to be finalised by mid-year.
It coincided with a plunge in iron ore prices that caused companies such as BHP Billiton and Fortescue Metals Group to push back projects, freeing up the labour market.
Reserve Bank economist Christopher Kent noted on Friday that there had been a widespread pull-back in the sector.
“The sharp fall in bulk commodity prices from the middle of last year prompted mining firms to reassess their expenditure and the viability of some investment projects,” he said.
Union leaders welcomed the news and praised the efforts of those in the community who opposed the deal.
Australian Council of Trade Unions president Ged Kearney said she was pleased Roy Hill had finally realised there was significant capacity in the local market, but queried why the company would sign the agreement anyway. “If they want to stick it in a drawer surely they can stick it in a drawer right now and come back to it,” Ms Kearney said.
She advised other resources companies to “take a breath” and consider their need for foreign labour.
Construction secretary for the Construction Forestry Mining and Energy Union Dave Noonan said he was not surprised by the decision.
“Firstly there’s been around 70,000 job losses in construction . . . there’s a lot of surplus labour in the industry.”
This story first appeared on The Australian Financial Review.