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Controversial mining projects in Australia: some questions on their socio-economic viability

Crawford School of Public Policy | Arndt-Corden Department of Economics

Event details

ACDE Seminar

Date & time

Tuesday 07 August 2018
2.00pm–3.30pm

Venue

Seminar Room 2, Crawford Building, Lennox Crossing, ANU

Speaker

Dodo J Thampapillai, National University of Singapore

Contacts

Ross McLeod

This seminar analyses two controversial mining projects – one on the Liverpool Plains in NSW and the other on the Galilee Basin in Central Queensland.

Notwithstanding the well-known adverse environmental and social externalities of these projects, private financial analyses demonstrate significant revenue gains to the mining firms and render expenditures on mining to be sound investments. Nevertheless, economic analyses illustrate that the net benefits to Australia are possibly absent – even without accounting for environmental social externalities.

Dodo Thampapillai argues that the assessment of mining decisions must account for the depreciation of the mineral asset. When this is measured by recourse to the Hartwick Rule, these mining projects demonstrate monetary viability only when the Resource Rent Tax is enforced, and the revenue invested in its entirety on options that generate annual returns above 4 per cent. Moreover, environmental and social externalities would wipe out this monetary viability. Besides, with both projects, agriculture is a potentially dominant and viable alternative.

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