Foreign-owned major resource projects

By Stephen Mayne

November 10, 2008

We all know the story of Australia's booming economy and budget surpluses thanks to the China-driven commodities boom. But how much better off would we be if we owned more than 20% of our resources industry? Here is a list of more than 50 major Australian resource projects that are controlled by foreign investors. Additionally, here are lists of foreign companies generating more than $200m, and Australia's improving foreign ownership record.

Argyle Diamond Mine: world's biggest diamond mine, owned by Rio Tinto which is London-based, 15% Australian owned and 9% owned by the Chinese government. Royalty cut from 7.5% to 5% from January 2006 in exchange for $1 billion under ground expansion.

Bass Strait: The Esso/BHP joint venture remains our biggest resource project in history having paid an incredible $68 billion in nominal taxes and at one point contributing 12% of Federal revenues. It's been in decline since 1986 when it peaked at 550,000 barrels a day and it's now down to less than 90,000 barrels a day and falling at the rate of 15% a year. However, the 3.5 billion barrels produced so far are worth more than $400 billion in today's terms and there's still an estimated 15-25 years of life in the project thanks to plentiful gas reserves. With BHP 40% Australian owned, the overall local equity is just 20%, but the Federal Government is now raking in more than $500 million a year in resource rent tax thanks to surging oil prices.

Bayu-Undan and Darwin LNG: This gas field is 250km south of Suai in East Timor and 500km north-west of Darwin. The pipeline and $2.4 billion Darwin plant is operated by Houston-based ConocoPhillips with 56.72%. Other shareholders include Italy's ENI 12.04%, Santos 10.64%, INPEX 10.52%, Tokyo Electric 6.72%, and Tokyo Gas 3.36%. The entire output will be sold to Tokyo Electric and Tokyo Gas for 17 years. East Timor gets 90% of the royalties which are estimated to be worth $200 million a year when the project reaches full production. Given sky-rocketing oil and gas prices, the development is probably worth up to $10 billion. Australian ownership is about 7% and East Timor ownership is zero.

Blackwater: the Bowen Basin mine in Queensland produces 14 million tonnes a year of coking and thermal coal and is a 50-50 joint venture between BHP-Billiton and Japanese trading giant Mitsubishi. BHP is 40% Australian-owned so overall foreign ownership of this mine is 80%. The previous 7% Queensland royalty has risen to 10% for all coal sold at more than $100 a tonne.

Blair Athol: one of Australia's largest export thermal coal mines in Queensland's rich Bowen Basin which produces 9% of all coal used in Japanese power generation. Operated by Rio Tinto which owns 71.2%, Unisuper has 15%, Japan Coal Development Australia 10.4% and 3.4% is with J-Power, which operates 67 power stations in Japan. It produces 11 million tonnes a year which is worth more than $1 billion. The previous 7% Queensland royalty has risen to 10% for all coal sold at more than $100 a tonne, and it is roughly 35% Australian owned.

Boddington Gold Mine: Denver-based Newmont owns two thirds and South Africa's AngloGold Ashanti one third after Newcrest sold its 22.22% equity interest for $225 million in March 2007, although this excludes project debt. The $1.9 billion redevelopment is forecast to generate one million ounces a year worth about $850 million on current prices. Australian ownership would be 5% at best through Normandy shareholders who accepted Newmont's scrip takeover. Gold is free of state royalties in WA.

Bootu Creek: manganese mine in the Northern Territory operated by ASX listed but Singapore-based OM Holdings which doesn't disclose its royalty payments but money goes to the NT Government and the Northern Land Council.

Brockman/Nammuldi: Located about 60 km north-west of Tom Price in the Pilbara and 100% Rio Tinto owned, so Australian ownership only 15% and the Chinese government has 9%. First opened in 1992 and then re-opened after a major upgrade in 2003. Annual production of 8 million tonnes worth about more than $1 billion based on lilely 2008 contract prices so WA royalty will be more than $30 million based on 3.75% rate.

Burton: Bowen Basin coking and thermal coal mine in Queensland operated by US company Peabody Energy which produces almost 5 million tonnes a year. Used to be owned by Excel Coal before Peabody's 2006 takeover. The previous 7% Queensland royalty has risen to 10% for all coal sold at more than $100 a tonne.

Callide: one of the trophy assets operated by South African company Anglo American. Produces about 10 million tonnes of thermal coal in Queensland's Bowen Basin. The previous 7% Queensland royalty has risen to 10% for all coal sold at more than $100 a tonne.

Callie: Northern Territory gold mine owned by US giant Newmont. Paid $28 million in royalties in 2006-07 which were split between the Territory government and Central Land Council.

Capcoal: a cluster of mines west of Rockhampton in Queensland which are controlled by South African mining giant Anglo American and has Japanese trading house Marubeni as a minority partner. Total coking coal production is running at 8.5 million tonnes a year. The previous 7% Queensland royalty has risen to 10% for all coal sold at more than $100 a tonne.

Channar: The coastal Pilbara iron-ore mine has a capacity of 10 million tonnes worth more than $1.2 billion based on likely 2008 contract prices. Rio Tinto owns 60% and China Iron and Steel the remaining 40%, so overall Australian ownership is just 9% and the WA government's 3.75% royalty would deliver more than $50 million a year.

Collinsville: banks once wrote off more than $500 million on this Queensland coking and thermal coal mine when it was operated by MIM. These days it is controlled by Swiss giant Xstrata with Japan's Itochu as a minority shareholder and it produces almsot 6 million highly profitable tonnes a year. The previous 7% Queensland royalty has risen to 10% for all coal sold at more than $100 a tonne.

Cosmos Nickel Project: the trophy West Australian asset owned by Jubilee Mines which has just been swallowed by Swiss-based and London-listed Xstrata in a $3 billion takeover.

Dawson Central: BHP's old Moura mine in Queensland plus two additional operations on adjacent tenures. Now 51% owned by the South African giant Anglo Australian and 49% by Japanese trading house Mitsui. After an $800 million expansion is now producing more than 12 million tonnes of thermal and coking coal a year. The previous 7% Queensland royalty has risen to 10% for all coal sold at more than $100 a tonne.

Eastern Range: Rio Tinto 54% and Shanghai Baosteel Group Corporation 46%, so overall Australian ownership just 8.1%. Produces 6.5 million tonnes a year worth more than $700 million a year based on likely 2008 prices. At the standard 3.75% rate, WA royalty is more than $25 million a year.

Ensham: the thermal coal mine in Queensland produces more than 7 million tonne a year. It is 85% owned by Japanese company Idemitsu, one of the world's biggest privately owned energy companies. Japanese utility J-Power owns 10% and Korean company LG has the remaining 5%. The previous 7% Queensland royalty has risen to 10% for all coal sold at more than $100 a tonne.

Ernest Henry: former MIM mine near Mt Isa that is now controlled by Xstrata which produces about 170,000 ounces of gold and 130,000 tonnes of copper concentrate a year. Profits exceed $100 million on annual revenue of more than $300 million and Australian ownership is zero.

Goonyella Riverside Mine: the Bowen Basin mine in Queensland produces 14 million tonnes a year of coking coal and is a 50-50 joint venture between BHP-Billiton and Japanese trading giant Mitsubishi. BHP is 40% Australian-owned so overall foreign ownership of this mine is 80%. The previous 7% Queensland royalty has risen to 10% for all coal sold at more than $100 a tonne.

Gorgon: the giant LNG project off WA and gas processing plant at Barrow Island is now expected to cost as much as $18 billion with deliveries to begin in 2011. Operator Chevron has 50% with Shell and ExxonMobil each owning 25%. Heads of agreement have been signed with three customers for 25 years, including Tokyo Gas and Chuaka Gas, with each taking 1.5 million tpy. The project is expected to generate $3 billion a year in export income and the Federal government will pocket an estimated $15 billion in resource rent tax over 25 years. The WA taxpayer gets nothing, but they are pressing the Federal government for a slice of the action. Zero Australian ownership but with huge construction blowouts that might not be such a bad thing.

Gove bauxite mine and alumina refinery: Alcan's biggest Australian asset is now part of Rio Tinto which is only 15% Australian owned and 9% owned by the Chinese government. Located at Nhulunbuy on the Gove Peninsula in the east Arnhem Land region of the Northern Territory, a $3 billion expansion has lifted alumina production from 2 million to 3.8 million tonnes a year, but it only paid $10-$12 million in royalties to the government and Aboriginal land owners in 2006-07.

Groote Eylandt: manganese mine in the Northern Territory owned 60% by BHP-Billiton and 40% by South African giant Anglo American so overall Australian ownership just 25%. Paid $29 million in royalties in 2006-07, the highest of any Territory mine, with a portion going to the Aboriginal trust.

Hail Creek: a Rio Tinto operated coal mine in Queensland which is currently under construction and will produce more than 4 million tonnes a year. Marubeni Coal has 5.33% and Sumisho Coal 2.67%, with Rio Tinto holding the balance. Rio is only 15% Australian owned. The previous 7% Queensland royalty has risen to 10% for all coal sold at more than $100 a tonne.

Harriet: US company Apache Energy controls the Harriet joint venture on the North West Shelf, which operates a string of profitable oil fields all processing through the Varanus Island production hub.

Jabiru: uranium mine 220km east of Darwin in Kakadu which is owned by ERA, itself 68% owned by Rio Tinto, which is only 15% Australian-owned. Overall Australian ownership about 25% and pays 5.5 per cent of its net sales revenue to the Federal Government each year plus $200,000 in rent for the use of the land. The Federal Government gives 4.25 per cent of the revenue money to NT-based Aboriginal groups including the Mirarr traditional owners.The remaining 1.25 per cent is paid to the NT Government. NT received $3.63 million in 2006-07, with the Aboriginals Benefits Account getting $12.37 million.

Jellinbah East: open cut coal mine near Blackwater in Queensland that produces almost 4 million tonnes of coking and therml coal a year. South African mining giant Anglo American has about 23%, Japanese trading house Marubeni 15% and the remainder is held by private companies and individuals such as Jim Gorman and Sam Chong. The previous 7% Queensland royalty has risen to 10% for all coal sold at more than $100 a tonne.

Kalgoorlie Super Pit: 50-50 joint venture between Canadian company Placer Dome and Denver-based Newmont which produces more than 800,000 ounces a year. Australian ownership of our biggest gold mine is less than 5% through Newmont and no gold royalty is payable in Western Australia.

Krestel: the old Gordonstone coal mine in Queensland which Rio Tinto renamed after buying out Arco in 1998. Japanese trading house Mitsui has 20%. Currently undergoing a $1.1 billion expansion to extend its life by 20 years but Rio Tinto is only 15% Australian owned. The previous 7% Queensland royalty has risen to 10% for all coal sold at more than $100 a tonne.

Liddell: the Hunter Valley coal mine has just been expanded to 3.5 million tonnes per year and is 67.5% owned by Swiss giant Xstrata and 32.5% owned by the Japanese joint venture Mitsui-Matsushima. The NSW government collects 7% for open cut mines.

Marandoo: Commissioned in 1994, this 100% Rio Tinto operation is located about 45km from Tom Price and adjacent to the Karijini National Park. The nominal production capacity of 15 million tonnes is worth more than $1.5 billion based on 2008 prices. Australian ownership is only 15%, the Chinese government has 9% and the WA government collects a 3.75%.

McArthur River: zinc mine in the Northern Territory owned by Swiss giant Xstrata. Paid no royalties from 1995 until 2006 but just shelled out $26.12 million in calendar 2007 as part of a deal to facilitate a $110 million expansion. Will pay $32 million to an Aboriginal community benefit trust over the 21-year life of the mine, but future royalties to the Territory government are unknown.

Mesa J: This Pilbara mine is the world's biggest supplier of low grade iron-ore. A massive 50-60 million tonnes is shifted each year which, after processing, translates into about 32 million tonnes of saleable ore, worth more than $2.5 billion. Rio Tinto owns 53%, Mitsui 33%, Nippon Steel 10.5% and Sumitomo Metal 3.5%, so overall Australian ownership is just 8% but the WA government pockets a 3.75% royalty which is worth about more than $100 million a year.

Moranbah North: underground coking coal mine in Queensland's Bowen Basin that produces about 4.5 million tonnes a year for South African mining giant Anglo American. The previous 7% Queensland royalty has risen to 10% for all coal sold at more than $100 a tonne.

Mt Owen/Ravensworth East: this combined Hunter Valley coal mine has development approvals to expand to a whopping 15 million tonnes per annum. It is 100% owned by Swiss-based mining giant Xstrata. The NSW government collects 7% for open cut mines.

Mt Tom Price: Rio Tinto's oldest operation started production in 1966 and still produces up to 20 million tonnes a year worth more than $2 billion a year on 2008 contract prices. Australian ownership only 15% through Rio but WA government royalty of 3.75%.

Mt Isa Mines: one of the few places in the world where the four minerals – copper, zinc, lead and silver – are found and mined in close proximity. Owned by Swiss-based and London-listed Xstrata since the MIM takeover in 2001, Mt Isa is now a bonanza with annual production capacity of 5.1 million tonnes of zinc/lead and 6.2 million tonnes of copper which produces profits of about $1 billion a year. Queensland royalty take was almost $100 million a year.

Mt Newman: Australia's second biggest iron ore project is 85% owned by BHP Billiton, 10% by Mitsui-Itochu Iron and 5% by Itochu Minerals. Annual production of more than 25 million tonnes is worth more than $2 billion, so the mine is worth at least $5 billion and Australian ownership is 34%. WA taxpayers pocket a 3.75% royalty.

Newlands: includes the Eastern Creek open cut coal mine and the Southern underground mine west of Mackay in Queensland. Total coking and thermal coal production of almost 9 million tonnes a year. Controlled by Swiss giant Xstrata with Japan's Itochu holding a minority interest. The previous 7% Queensland royalty has risen to 10% for all coal sold at more than $100 a tonne.

Newpac No1 Colliery: Xstrata has just won control of the Hunter Valley coal mine through the $1 billion-plus takeover of Resource Pacific. The Newpac mine is having a new longwall built and should reach 8 million tonnes per year by 2010. The NSW government collects 6% for underground mines.

North Goonyella: underground coking coal mine in Queensland's Bowen Basin which produces 1.5 million tonnes a year and is owned by US coal company Peabody Energy. The previous 7% Queensland royalty has risen to 10% for all coal sold at more than $100 a tonne.

North West Shelf: The six equal participants in the North West Shelf Venture each own 16.67%. Woodside Petroleum, 38% owned by Shell, is the operator, then you have Shell itself, BHP Billiton, which is 40% Australian owned, BP, Chevron Corp and Japan Australia LNG (MIMI) Pty Ltd comprising a partnership between Japan's Mitsui and Mitsubishi. The Chinese government's CNOOC holds a 25% share in China LNG, a new joint venture within the existing structure that diluted the other parties down to 12.5% each. Exempt from the Petroleum Resource Rent Tax until Wayne Swan's first budget, but does pay royalty of about 10%, 68% of which passes to the Federal government. Overall Australian ownership is about 10% and a total of $19 billion has been invested so far. Federal government has just ended the holiday on resource rent tax which will cost the consortium more than $500 million a year.

Norwich Park Mine: the Bowen Basin mine in Queensland produces 5.7 million tonnes a year of coking coal and is a 50-50 joint venture between BHP-Billiton and Japanese trading giant Mitsubishi. BHP is 40% Australian-owned so overall foreign ownership of this mine is 80%. The previous 7% Queensland royalty has risen to 10% for all coal sold at more than $100 a tonne.

Oaky Creek: This group of underground and open cut coking coal mines in Queensland's Bowen Basin produce 6.5 million tonnes a year and are owned by Swiss mining giant Xstrata. The previous 7% Queensland royalty has risen to 10% for all coal sold at more than $100 a tonne.

Origin CSG reserves: US giant ConnocoPhillips has agreed to pay a minimum $US5 billion for 50% of Origin's Queensland coal seam gas reserves, plus a huge 40train LNP facility in Gladstone.

Paraburdoo: in the Pilbara near the coast and 100% owned by Rio Tinto which is 15% Australian owned and 9% owned by the Chinese government. Produces 11 million tonnes a year which is worth more than $1 billion based on 2008 prices and standard 3.75% royalty applies.

Peak Downs: the Bowen Basin mine in Queensland produces 9 million tonnes a year of coking coal and is a 50-50 joint venture between BHP-Billiton and Japanese trading giant Mitsubishi. BHP is 40% Australian-owned so overall foreign ownership of this mine is 80%. The previous 7% Queensland royalty has risen to 10% for all coal sold at more than $100 a tonne.

Puffin: China Petrochemical Corporation, China's biggest energy distributor has just secured 60% control of the Puffin oil field in the Timor Sea from the struggling AED Oil in a deal that values the assets at $1 billion.

Ranger: uranium mine in Kakadu operated by ERA, which is 68% owned by Rio Tinto, the London-based company which is only 15% Australian-owned. Overall Australian ownership about 25% and paid $16 million in royalties in 2006-07, with $2.63 million going to the Northern Territory and $12.37 million to the Aboriginal Benefits Account.

Rolleston Coal Mine: Swiss-based Xstrata's Queensland mine which cost $540 million. Sumisho Coal Australia and IRCA Rolleston each own 12.5%. Will generate more than $40 million a year for the Queensland government now that the 7% royalty has risen to 10% for all coal sold at more than $100 a tonne. Produces about 8 million tonnes a year, so worth at least $2 billion given thermal coal contract prices have risen from $US32 a tonne to more than $US100 a tonne since 2002. Australian ownership zero.

Saraji: the Bowen Basin mine in Queensland produces 6.8 million tonnes a year of coking coal and is a 50-50 joint venture between BHP-Billiton and Japanese trading giant Mitsubishi. BHP is 40% Australian-owned so overall foreign ownership of this mine is 80%. The previous 7% Queensland royalty has risen to 10% for all coal sold at more than $100 a tonne.

Weipa: the world's biggest bauxite mine at the top of Cape York produces 16 million tonnes a year and is 100% owned by Rio Tinto, meaning it is only 15% Australian owned and 9% owned by the Chinese government.

West Angelas: The $880 million Pilbara iron ore mine commenced production in 2002 at a rate of 7 million tonnes per annum, but is now up to 25 million, which will be worth more than $2.5 billion in 2008. Rio Tinto owns 53%, Mitsui 33%, Nippon Steel 10.5% and Sumitomo Metal 3.5%, so overall Australian ownership is just 8% but the WA government pockets a 3.75% royalty which should be worth more than $100 million a year.

Wheelarra: BHP-Billiton's 12 million tonnes per year iron ore mine located 40kms east of Newman in the Pilbara, WA which is 40% Chinese-owned based on 10% stakes held by Wuhan Iron & Steel, Maanshan Iron & Steel, Jiangsu Shagang and Tangshan Iron & Steel. Normal 3.75% royalty applies.

Woody Woody: the manganese mine in the Pilbara, WA has just been bought by Ukranian billionaire Gennadiy Bogolyubov after the protracted takeover battle for Consolidated Minerals.

Worsley Alumina: the giant bauxite mine and alumina refinery in WA is a joint venture between BHP Billiton (86%), Japan Alumina Associates (10%) and Sojitz Alumina (4%). Given that BHP-Billiton is only 40% Australian owned, Worsley is 34.4% locally held.

Yandi: Australia's biggest iron ore mine is owned as follows: BHP Billiton 85%, Itochu Minerals 8%, Mitsui Iron 7%. Production of more than 35 million tonnes worth over $3 billion for this 34% Australian owned through BHP Billiton's 40% Australian ownership. WA taxpayers pocket a 3.75% royalty worth more than $150 million a year.

Yandicoogina: Rio Tinto's biggest Australian iron ore mine in the Pilbara with a recent expansion lifting annual production to 52 million tonnes. Produces revenue of more than $5 billion a year for London-based Rio which is 15% owned by Australian investors. The 3.75% annual royalty payment generates more than $200 million a year for WA taxpayers, but the mine is worth at least $15 billion for Rio Tinto shareholders.

Additionally, here are lists of Australia's improving foreign ownership record, foreign companies that generate more than $200 million and foreign government investments in Australia.

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