The Multinational Monitor



Uranium, Bauxite, and Coal

Paying the Mining Companies to Haul the Minerals Away

by George Riley and Greg Crough

Multinational investment is highly concentrated in the Australian mining industry. In 1975, foreign companies controlled 52.2 percent of metallic minerals, 73 percent of fuel minerals, and 52.6 percent of other minerals for an overall control of the mineral industry of 60 percent.

The industry is also heavily export-oriented; some 70 percent of the value of mineral production comes from exports, largely to Japan. The industry accounted for 29 percent of total Australian exports in 1977, compared with 12 percent in 1960.

Over the past few years, foreign investment in the industry has escalated, and U.S. investment in 1981 in Australia's mineral business is ex pected to be U.S.$673 million, up 40 percent from last year.

Cheap energy and huge reserves have been the principal attractions for the giant mining companies, and the federal government traditionally has sweetened the deal with substantial tax incentives. A 1974 federal government study, for instance, found the Australian government's assistance to the mining industry from 1968-1973 exceeded taxation receipts by $A55 million.

When the Labor Party came to power in 1972, it immediately began examining the export earnings of the mining industry. Government economists suspected transfer pricing by the multinationals had forced the country into a losing position. The Labor government instituted controls to prevent future manipulative pricing arrangements. Many of these measures the Fraser government has since rolled back or not enforced, including the most local ownership requirements.


Australia has over 27 percent of the non-communist world's low-cost uranium. The Fraser government is firmly committed to the development of this resource; Labor is nominally opposed, but the party's performance while in office suggests that its opposition could fade if the party were to be returned to power.

The government has been a participant in at least two uranium ventures. The Labor party inherited a 50 percent ownership in the Ranger project in the Northern Territory and a 42 percent equity position in Mary Kathleen Uranium Ltd., a corporation controlled by CRA (CRA is 72 percent owned by Rio Tinto Zinc.)

The Labor party halted operations at Ranger until the Ranger Environmental Inquiry could finish its report. However, the Labor government authorized start-up operations at Mary Kathleen deposit to meet contracts for 900 tonnes (metric tons) of uranium arranged by the previous government of the conservative Liberal-National Country parties.

After the conservative coalition returned to power it resolved Australia's contradictory export policies by removing the ban on exports of uranium in August 1977. The Fraser government has divested itself of both its Mary Kathleen and Ranger holdings. To further encourage foreign expansion, the Fraser government has relaxed restrictions requiring that uranium investments have at least a 75 percent local equity.

Exxon was the first to benefit from the government's new policy toward uranium investments. Through its Esso subsidiary, Exxon has purchased 15 percent of the Yeelirrie mine in Western Australia. Exxon's partners, Angesellschaft, a West German corporation, and Western Mining, a local company, hold 10 to 75 percent, respectively. However, the Yeelirrie project violated the 75 percent restriction because Exxon planned to provide an additional 35 percent of the total costs for an additional 35 percent of the uranium. Although the government acknowledged that this investment went against the guidelines, the Foreign Investment Review Board decided to waive the requirement because the project "would be of significant economic benefit to Australia."

The next multinational to seize the opportunity presented by the Fraser government was the U.S. company, Getty Oil. Getty holds a 35 percent interest in the Jabiluka deposit, the world's largest uranium project. Getty's partner in this project in the Northern Territory is Pancontinental, a company described as "local" but whose actual ownership is obscured by proxy shareholdings.

In October 1979, the government approved a joint venture between British Petroleum and Western Mining involving only 51 percent local equity. The BP-Western project will explore and develop the massive copper, uranium, and gold prospect at Roxby Downs in South Australia.


Drawn by the prospect of cheap energy and plentiful reserves, aluminum companies have significant investments in Australia. In 1978 Australia produced 24.3 million metric tons of bauxite and refined three-quarters of this to produce 6.8 million metric tons of alumina, 93 percent of which was exported to aluminum smelters around the world. Australia provides more than 29 percent of the world's alumina-the intermediate product in the production of aluminum-making it the leading supplier. There are three aluminum smelters currently in operation: Comalco operates a 112,000 metric ton per annum (t.p.a.) plant at Bell Bay, Tasmania; Alcoa runs a 100,000 t.p.a. plant at Point Henry, Victoria; and Alcan runs a 45,000 t.p.a. plant at Kurri Kurri, New South Wales.

The production of bauxite, alumina and aluminum in Australia clearly is controlled by large multinationals. The five major participants in the industry are: Alcan Australia, which is a 70 percent owned subsidiary of Alcan Aluminum Ltd. of Canada; Alcoa of Australia, 51 percent owned. by Alcoa of America; Comalco, which is 45 percent owned by Kaiser Aluminum and 55 percent owned by CRA, a subsidiary of the British Rio Tinto Zinc; Gove Project, 70 percent owned by Swiss Aluminum Ltd. of Zurich; and Queensland Alumina Ltd., a consortium of local and multinational firms that operates an alumina refinery at Gladstone. Several of the alumina giants have announced plans to start or expand operations in Australia [see. Multinational Monitor, February, 1981].


Australia is the eighth largest black coal producing nation in the world. Coal employs more people than any other part of the mineral industry, has the highest value added, and is export-oriented to such an extent that Australia is the world's third largest black coal exporter. The Japanese steel industry is the major market, taking 80 percent of the exports.

Foreign multinationals dominate the coal industry, with foreign ownership rising to 62 percent in 1975 from 53.4 percent the year before, and continuing to climb since then.

The major coal producer in New South Wales-the center of the coal industry -is Clutha Development Pty. Ltd., jointly owned by U.S. industrial magnate D. K. Ludwig and the British Petroleum Company. Clutha exports over half of its production, and is the second largest coal exporter in Australia.

In Queensland, coal mining is shared by Utah Development Company, a subsidiary of General Electric, Thiess Holdings Ltd., and Thiess Dampier Mitsui Coal Pty. Ltd.

The industry has seen a host of takeovers in the last few years, partly because coal can bring enormous profits (witness Utah Development Company's profit of $158 million for 1977-the largest profit made by any company in Australia that year), and partly because coal will serve as a major source of energy in the future, particularly as oil reserves dwindle and prices continue to rise. - G.R.

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