Government legislates to cancel Aurukun lease

Published Tuesday, 20 April, 2004 at 12:00 AM

Natural Resources & Mines
The Honourable Stephen Robertson

Ministerial Statement to the Queensland Parliament:

Mr Speaker

Honourable Members will recall that on 22 October 2003 the Premier and I demanded that French mining company, Aluminium Pechiney Holdings Pty Ltd, surrender the mining lease it has held over the vast Aurukun mineral deposits on Cape York since 1975.

We also announced that the government intended calling for international expressions of interest to develop the "globally significant" Aurukun deposits which contain an estimated 500 million tonnes of bauxite.

These deposits would be highly attractive to the world aluminium industry.

We sought surrender of the lease because Pechiney had failed to commence construction of an alumina refinery by 31 December 1988 - which was a key requirement of the Aurukun Associates Agreement 1975 it signed with the Bjelke-Petersen Government.

In effect, Pechiney has been in breach of the agreement for at least the last 15 years and has been "parking" this valuable mineral resource to suit itself while it invested in new refining facilities elsewhere in the world.

As a result, Queensland has forgone a significant contribution to the economy from potential export income, new industrial opportunities for down-stream processing and jobs flowing from development of this resource.

When Pechiney failed to meet the 24 October 2003 deadline to surrender the lease, the Queensland Government immediately started legal proceedings in the Supreme Court to enforce surrender.

None of this is changed by the recent takeover of Pechiney by Alcan.

Unfortunately, the matter still remains unresolved before the Supreme Court.

Given the potential for the litigation to become protracted and the increasing legal costs being expended by both the State and Pechiney, State Cabinet yesterday approved further action to bring this matter to finalisation.

Mr Speaker, later today I will introduce legislation to repeal the Aurukun Associates Agreement Act 1975.

This legislation will rescind the Aurukun Associates Agreement 1975, cancel Mining Lease 7032 thereby rendering the Supreme Court litigation futile.

It will also provide that the State is not liable for any claim to compensation or payment by Pechiney or any other person arising out of the cancellation of the mining lease.

In return, the State will reimburse Aluminium Pechiney Holdings Pty Ltd $518,160 in mining lease rentals paid for the calendar years 1989 to 2003 plus $54,000 interest.

The State will also pay an amount of costs, to be assessed on a standard basis for the proceedings commenced by the State in the Supreme Court, to enforce the surrender of the lease. Mr Speaker, I want to stress that the government's action today is in no way indicative of Sovereign Risk and the mining industry can be assured this is a special case related only to the Aurukun Associates Agreement Act 1975.

We are taking this action so the State - on behalf of Queensland taxpayers - can optimise the ultilisation of the Aurukun resources and pursue the associated multi-billion dollar investment opportunities.

The status of the world's alumina market is such that there are currently production restrictions at a global level due to limited alumina supply and significant increases in spot alumina prices.

Therefore within the next three to five years, the State has an opportunity to attract global interest in the Aurukun minerals and, in particular, the bauxite resources.

Mr Speaker, we believe Pechiney has had ample opportunity over the past 28 years to develop the Aurukun resource and its inactivity has been a grave disappointment and concern to the Government.

That's why we are taking this decisive action today to ensure we can begin to maximise the returns to the people of Queensland from this valuable resource."