PERTH (miningweekly.com) – The Minerals Council of Australia (MCA) has denied that Australian manufacturers were being overlooked in favour of their foreign counterparts.

In its submission on measures to extend Australian industry participation, the industry body noted that in 2009, local content accounted for around 88%, or some A$75.8-billion, of the mining industry’s total demand for goods.

The MCA stated that 53.3% of iron and steel used by the mining industry was locally supplied during that year, with 64.6% of the structural metal products used by the mining industry also sourced from local industry participants. Around 71.1% of sheet metal products used by the mining industry was also locally supplied in 2009, the MCA said.

“More recent data from mining states highlights further the degree to which both local business opportunities and broader societal benefits are being generated by the mining sector in Australia,” the industry body noted.

It added that in 2010/11, the Queensland resources sector purchased A$20.5-billion in goods and services from Queensland businesses, up from the A$18.8-billion spent in the previous year.

A recent internal study for Western Australia’s resources sector also showed a continued high level of local participation in the mining sector supply chains, with 86% of spending sourced domestically in the construction phase, and 95% in the operating phase of Western Australian projects.

“With the large expansion of Western Australian mining projects, operations expenditure has increased substantially, providing sustained opportunities for local suppliers,” the MCA reported.

The latest focus on local content in mining projects comes after Prime Minister Julia Gillard warned international mining companies that they could be faced with the wrath of the World Trade Organisation if it was found that Australian suppliers were locked out of local resource projects.

Gillard’s warning came as the Australian Industry Group claimed that non-Australian companies were often given preference to subcontractors and suppliers in their country of origin.

The report also stated that there has been increasing evidence that major, Australia-based mining companies, with raw materials supply contracts in China, were also being required to give preference to Chinese-produced capital equipment and other inputs used in Australia.

The federal government’s push for local content in the country’s resources projects started last year, after Gillard announced that resources companies could lose access to a 5% tariff reduction on imported materials for projects worth A$2-billion or more, unless they provided equal opportunity for Australian suppliers.

The government was also seeking comment on its announcement to apply the Australian Industry Participation (AIP) plan requirements to large government grants over A$20-million, further tightening the administration of the Enhanced Project By-law Scheme (EPBS).

The scheme would create opportunities for Australian suppliers to participate in major projects, and encouraged the use of Australian industry in global supply chains.

However, in its submission, MCA noted that the changes to the EPBS and AIP plans would add further administrative complexities and compliance costs to the mining industry, in the absence of a compelling public policy rationale.

It would also actively deter companies from taking the voluntary steps required to participate in the scheme, MCA said.

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