FRAN KELLY

Well, no Whyalla wipeout for South Australia’s steel industry if the proposed Adani Carmichael coal mine can come to the rescue of the struggling Arrium steelworks, which is a proposal now on the table. The project, if it gets off the ground, says it will source 56,000 tonnes of steel from Arrium for its 400-kilometre railway line between the Central Queensland mine and the port at About Point. The deal could help shore up the future of Arrium Steel, which went into administration last year with debts of more than $3 billion.

Federal Resources Minister Matt Canavan will be in Whyalla for this announcement. Minister, hello, welcome to Breakfast.

MINISTER CANAVAN

G’day Fran. How are you?

FRAN KELLY

I’m very well. I’m tempted to ask you if you’d break into song for us like the Philippines Natural Resources Secretary, Regina Lopez, did just then.

MINISTER CANAVAN

I didn’t hear that but maybe I could sing “A Little Less Conversation, More Action”: that’s the theme today.

FRAN KELLY

Perfect, go right ahead.

MINISTER CANAVAN

No, I’ll decline actually.

FRAN KELLY

Minister, this announcement … You’re going to be in Whyalla, I understand, for this announcement that the Adani coal mine would buy the steel from the Arrium steel industry in Whyalla … The deal’s going to be signed. Is it a done deal?

MINISTER CANAVAN

Well, obviously, it’s dependent on the mine and the project going ahead – they won’t buy steel to build modern art, they’re building a coal mine – so we need the project to go ahead. They’re hoping to make that decision soon, so I certainly want to see the project go ahead, and if it does go ahead now, the steel for the rail line will come from Australian steel works, protecting Australian jobs.

I think everybody round Australia, or most, would know how fraught the situation has been for the Whyalla steelworks. Whyalla, relatively speaking, is a small town of around 20,000 people and, without the steel works there, you wouldn’t have the mine and you’d call into question the viability of almost the whole town is my understanding, so this is incredibly important for our country and, to me, just demonstrates, putting aside the Adani project – and I know that’s controversial – but the real important thing here is that developing our country.

By developing Northern Australia, which is my job as Minister for Northern Australia, we do benefit the whole country, because if we get big projects going, if we build dams, roads and this project, which is a huge project, in the Galilee Basin, you do have spinoff benefits to other businesses all around Australia and other jobs. So, I’m very enthused about this. It’s fantastic news for Australian jobs. And congratulations to Adani for working with an Australian company, doing their best to do this deal, and using Australian steel in their project.

FRAN KELLY

As you say, it’s all dependent on the mine going ahead. Did you have anything to do with this memo of understanding giving Arrium sole right to supply all the steel for the rail line for Adani?

MINISTER CANAVAN

Well, I wasn’t involved in commercial negotiations, Fran ...

FRAN KELLY

Was it your idea? Did you encourage it?

MINISTER CANAVAN

I have encouraged Adani to look for ways to maximise local involvement in their project. Certainly, the steel for the rail line was a big component of their project and an obvious choice. The Australian Government, only a few months ago, agreed to strengthen our procurement guidelines to try to ensure that more Australian steel is used in major projects. So, that’s our objective: we want to see Australian steel used in big infrastructure projects.

For our MSLs, we moved forward an ARTC upgrade of the Tarcoola rail line in South Australia. That’s about the same size – that’s about 300 kilometres I think of rail track there and this is about 400 kilometres for Adani – so, this is what we’re about, we’re about trying to protect Australian jobs and keeping an industry here and you do that by attracting investment, like Adani, you do that by trying to develop our country, not just sitting back and saying it’s all too hard and there are too many frogs or birds or trees and we can’t develop our nation like we did in the past. We’ve got to get on with it.

FRAN KELLY

Well, frogs and birds and trees are very important to many people but, as you say, so are jobs. But Adani has applied for a $1 billion concessional loan from the Northern Australia Infrastructure Fund. Will this offer from Adani and this link-up between Adani and Arrium Steel … is that likely to have an influence on the Northern Australia Infrastructure Fund’s decision? Will it look more favourably … and, ultimately, will that mean it’s taxpayers’ money that buys the steel from Arrium – it will be this one billion dollars?

MINISTER CANAVAN

Look, first of all, the proposed loan to Adani for the rail line is a loan – it’s not a subsidy or a grant – so primarily, of course, for the NAIF, the assessment is, well, is that loan viable and will we get our money back? That’s the test I’ve set for NAIF, in our mandate and in my discussions with them. Their job is to make those assessments, so I’ll leave them to comment on assessing this particular proposal.

If the NAIF  - and this is a generic situation, not just in regards to Adani – if the NAIF were to propose  to me a project for support, I could reject it on certain grounds, including whether it was inconsistent with Government policy. Now, it is Government policy, as I said, to try to support Australian procurement, Australian industry, and so I’ll obviously be looking at we do maximise Australian involvement in projects we fund through the NAIF.

FRAN KELLY

So, a link like this would make the proposal more favourable in your view?

MINISTER CANAVAN

In terms of the Government policy, obviously, in terms of the Government’s position – putting aside that the NAIF’s an independent body – in terms of the Government’s position, we’re happy to see investors use and maximise the amount of Australian product in their projects.

FRAN KELLY

It’s nice and tidy at the moment, isn’t it, for Adani, at a time when there’s a lot of pushback about the proposal.

MINISTER CANAVAN

Well, I do think now the question has to go back to those who are opposed to this project, you’ve got people like Mark Butler out there saying the project doesn’t stack up – I don’t know on what  basis he’s got view, certainly not from Westpac’s analysis, they did no assessment of Adani at all, they never mentioned Adani in their climate-change statement – but you’ve people like Mark, he’s a South Australian politician who you’d think would back South Australian jobs, and the question has to go to him now, does he support the Adani mine, does he support jobs at Whyalla?

Likewise, you have Bill Shorten running around calling Adani Indian billionaires. I don’t know what’s wrong with being Indian, for a start, and I don’t know what’s wrong with being a billionaire. Of course we want to attract people who are successful and make money to our country to invest in it. The question has got to go bank to Bill: does he support jobs at Whyalla … and projects like this?

FRAN KELLY

Yes, but Minister, it’s not a zero-sum, game is it? You’re sounding like you feel you’ve snookered Labor on this because there’s a tie-up with Whyalla in South Australia, and certainly jobs are very important, but there’s plenty of people who look at the Carmichael mine proposal and say, if you’re talking about jobs, what about the jobs that might come with the death of the Reef, which has tens of thousands of jobs?

MINISTER CANAVAN

That’s an absurd statement, Fran, sorry, but the Adani mine has actually achieved, or received, federal and State Government approval, so I notice Bill Shorten runs round saying it’s got to stack up on environmental grounds; well, it has already: it’s been approved through the very stringent and robust EPBC process that we’ve got here at the Federal Government level.

I think we should respect that process. We’ve got bipartisan for the legislation and it’s gone through all the hurdles. Indeed, it took about six years, almost, for their project to receive approval under that process. It’s probably been the most-assessed project

FRAN KELLY

It was approved before the bleaching of the Reef, though. A lot of people are now focussing on the Reef. Tourism is Queensland’s biggest industry.  

MINISTER CANAVAN

Of course, and I literally live on the Reef, Fran, and no-one in North Queensland wants to see the Reef damaged at all but this project will produce coal that is 60 per cent higher in energy content terms than Indian coal, and, so, if you’re worried about global carbon emissions, and you’re worried about impact on the Reef, this project is nett positive for the Great Barrier Reef because it will help the world lower carbon emissions.

That’s what India’s got to do, under its Paris commitments: it has committed to build clean coal fired power stations. It has to use coal. It can’t provide power to its one billion people without coal. We can play a role in that because those clean-coal-fired power stations need higher quality coal . They can’t run efficiently on India’s relatively poor-quality coal that they have.

FRAN KELLY

You’re listening to RN Breakfast. Our guest is the federal Resources Minister, Matt Canavan. Minister, you’ve been pretty unrelenting in the last week or so in your criticism of Westpac for its announcement that it won’t finance any new thermal coal regions unless the coal within it meets a couple of requirements.

Last week, you were advocating a consumer boycott against Wetspac, this week you’re accusing the bank of a conflict of interest because one of its investment funds have invested in the competing Newcastle Port in New South Wales. You say that stinks to high Heaven. Why are you singling out Westpac? None of the other three major Australian banks are interested in putting money into Adani yet either, are they?

MINISTER CANAVAN

Well, it’s important to note – there’s a lot of focus on Adani, but this is not about Adani for me, and my frustration with Westpac or, as I’m calling them now, the Bank of New South Wales, that’s their original name …

FRAN KELLY

It’s not their name now, though …

MINISTER CANAVAN

No, well, I think they might want to revert to it because they have openly discriminated against North Queensland. Now, as I say, it’s not about Adani: it’s about opening up the Galilee Bain, it’s about utilising our resources as Australians to maximise the wealth we have in this country. Coal is our second-biggest export , it employs thousands of Australians, and I want to keep it that way.

And, so, I want to open up the Galilee but, by Westpac’s decision, they’ve said they won’t invest in any mine in the Galilee, even though some of those mines – not Adani’s, I might say, but some of those mines – actually will produce coal of a greater standard than the Newcastle coal that they will support. That is open and clear discrimination against one part of our country for another. That’s why I’m so frustrated with Westpac. I accept that …

FRAN KELLY

Frustrated, perhaps, but you are a federal Minister. Your criticism has been very pointed and, as I say, you are, basically, urging people in Queensland to run a boycott on Westpac. The Government won’t hold a royal commission into the banks because it says it’ll undermine confidence in the banks, and here you are perhaps undermining confidence in our second-biggest bank.

MINISTER CANAVAN

Well, they are two completely different issues, Fran …

FRAN KELLY

Same point of principle, though, isn’t it?

MINISTER CANAVAN

What I’ve stressed to Queenslanders – and to other Australians who want to see our nation develop – is they should, of course, seek to do business with banks that do align with their priorities too and, through Westpac’s decision, the Bank of New South Wales’ decision, they are showing that they’re not interested in developing the north or opening up the Galilee Basin.

They should not be somehow protected from criticism, Fran. They’re not a protected species, our banks, and I have not engaged in bank bashing, so to speak. I’m proud of our financial sector – they do a good job, they got through the GFC, we’re lucky to have stable and secure banks – but they do need to be held to account when they make such illogical decisions as this one.

The climate-change statement they put out … I get frustrated that no-one picks them up on the fact that they put out a 20-page glossy document … there is barely any analysis in it at all. It’s a very important issue, climate change, I’ve got no problems with banks putting out statements about how they would like to respond to climate change, it’s a really important issue but it deserves a lot better work and analysis than the poor attempt that Westpac made last week.

FRAN KELLY

Okay, Minister, just finally, briefly, if I can, if you can, the Treasurer’s issued a warning to BHP that if it sells out to a US-based hedge fund, and heads offshore, then executives could face criminal charges. Why is the Government going so hard on this?

MINISTER CANAVAN

Well, we take our foreign investment guidelines and regulations very seriously, and, about 15 years ago, in 2001, BHP merged with another company, and that merger was agreed to, approved, but subject to conditions including that BHP remain listed on the Australian Stock Exchange.

Now, on our assessment, clearly, the proposal from Elliott Management would breach those conditions and there are penalties to pay if those conditions are breached. All we are doing is stressing the Australian Government’s commitment to uphold our strong and robust foreign investment review framework and that’s something we’ll keep to.

FRAN KELLY

Minister, thank-you very much for joining us.

MINISTER CANAVAN

Thanks Fran.

FRAN KELLY

Matt Canavan is the Minister for Resources and Northern Australia.