I guess my thesis is: That The Commonwealth Government should lead Australia's need to diversify trade away from China dependance by processing our iron ore onshore into steel products , diversifying trade , adding Aussie value and sharing the wealth with all Aussies in the form of a Soverign fund similar to that of Norway.
RIO's reports on alumina/aluminium losses can be taken taken with a grain of salt because RIO, like BHP, have been charged by the ATO for transfer pricing and which RIO is still contesting the lower court judgement which was in favour of the ATO. So in summary, the losses cited above could be a bit rubbery if the ATO is correct.
The scale in which Alcoa/Rio smelts Aluminium here is away too low and plants are too antiquated to compete with China. One does not have to be Einstein to conclude that if China can import our bauxite/alumina oxide, thermal coal & LNG (the base materials for making aluminium with coal/LNG used to generate electricity) and that if most of the process is automated, that we should have a competitive advantage having the raw materials herse and that 90% of aluminium costs are the base materials+ electricity.
Arguements of how we cant cmpete with China remind me of British arguements why it could not compete with Germany & Japan post WW2. The truth of the matter was that Germany & Japan had brand new factories with state of the art engineering and know-how and that British factories were relics of WW2 weapons manufacture rejiged for auto and other domestic manufacturing.
A former neighbour ( a German immigrant now deceased) took pleasure in telling how the British scudded Manheim's factories and relocated the manufacturing machinery back to England while the Germans re-equipped their factories with brand new/state of the art machinery and then produced better engineered products at cheaper prices than the Poms.I remember how the VW Beetle blew away its Brisish equivalents with sheer quality.While the Mini had its few years in the Sun, it was plagued by poor materials and relyability .
A similar situation happened in Japan albeit a few years later.
One simply cant project the economics of producing small quantities of aluminium in ingot form by obsolete smelters to a giant Chinese style smelter with state of the art automation turning out automotive engine blocks, transmission castings etc and machining them via Cad/Cam with minimal labour content.
As I've said previously. we simply cant trust multinationals to do the job for us because multinationals want to minimise their tax by digging it up , shipping it out, loading the Aussie branch with debt & transferring price to avoid Aussie tax.
Our Privatisation program started with Hawke/Keating who wanted to float the AUD (US Treasury & the IMF wanted Australia to implement neo-liberal policies which included massive privatisation as a prerequisite to floating the dollar.
Since then successive Comm Governments have pursued this neo-Liberal policy up to and including the privatisation of Medibank Private recently.
IMO, we should revisit the notion of State owned enterprises to assure our National Security because we simply cant farm out some tasks to multinationals who may be here today & gone tomorrow. The recent exit of the 3 multinational auto manufacturers is a case in point: -they milked the taxpayer for all it was worth -they produced in too small quantities to be globally economically competitive -they failed to lead the trend to more fuel egfficient vehicles
So once the taxpayer stopped dishing out the dosh it was bye bye.
In summary, IMO, we can restart auto manufacturing here by using our strengths (not our weaknesses )which are cheap bauxite , Iron ore & coal/gas and casting/machining auto components for a global market in tax free manufacturing hubs dedicated to export via mostly automated plants. We have to forget the working class mentality that has been promoted by multinationals that any project is worthless unless it creates jobs and the Labor Party has been the worst at this spin, IMO. We should have no compunction in supporting low labour input projects so long as the proceeds are fairly distributed.
