Marine group to film mining and industrial impacts on Great Barrier Reef

It is one of Australia's most significant natural drawcards.

But it has also been identified as a prime location for exporting coal to huge markets in China and India.

In December last year, the Federal Government approved the creation of one of the world's largest coal ports at Abbot Point near the world heritage listed area, sparking outrage from conservationists and the Greens.

The development includes plans to dredge three million cubic metres of seabed.

The Environment Minister Greg Hunt says strict measures are in place to protect the reef.

The Abbot Point approval comes with a condition requiring the nearby water to contain less sediment than at present.

But the Byron Bay based marine conservation group Positive Change For Marine Life wants to know whether or not that truly is the case.

A film crew working with the organisation will spend the coming months travelling up and down the north Queensland coast filming and interviewing stakeholders.

It will also explore effects associated with dredging in Gladstone Harbour.

Positive Change for Marine Life founder and CEO, Karl Goodsell says they want to get the 'real' story out to the public.

"There's a lot of differing sides and opinions when it comes to industry and what's happening along the coastline adjacent to the Great Barrier Reef Marine Park and World Heritage Area," he says.

"We want to investigate that from a neutral perspective and put the story out there to the Australian and international community to let them make up their own mind."

The organisation plans to release the film later this year or early in 2015.

UPDATE 3-Worried Fed seeks to curb Wall Street banks commodity trade

Jan 14 (Reuters) - The U.S. Federal Reserve on Tuesday took a first formal step toward restricting the role of Wall Street banks in trading physical commodities, citing fears that a multibillion-dollar disaster could bring down a bank and imperil the stability of the financial system.

The Fed board voted to publish its concerns and potential remedies following months of growing public and political pressure to check banks' decade-long expansion into the commodities supply chain. The Fed also questioned the initial rationale for allowing them to trade and invest in risky raw materials and lease oil tanks or own power plants.

The Fed "expect(s) to engage in additional rulemaking in this area," according to prepared remarks of Michael Gibson, the Fed's director of bank supervision and regulation, to a U.S. Senate banking committee hearing on Wednesday.

The new rules could include a cap on total assets or revenues from such trading, increased capital or insurance, or prohibitions on holding certain types of commodities "that pose undue risk."

Facing a clearly uneasy regulator, some banks including JPMorgan Chase & Co are already quitting the business, a once-lucrative trading niche that has reaped billions of dollars of revenue for Wall Street over the years but is now facing diminished margins and stiffer capital rules.

But others, such as Goldman Sachs Group Inc, have stood firm, defending an operation they say benefits customers. Due to a grandfather provision in a 1999 banking law, the Fed has less leeway to restrict the activities of former investment banks Goldman and Morgan Stanley, Gibson said.

In a 19-page document that included two dozen questions, the Fed offered a host of reasons for imposing new restrictions in the interests of limiting potential conflicts of interest and protecting the safety and soundness of the banking system. It invoked disasters including BP's oil spill in the Gulf of Mexico in 2010 and the derailment and explosion of an oil train in Canada last year.

"The recent catastrophes accent that the costs of preventing accidents are high and the costs and liability related to physical commodity activities can be difficult to limit and higher than expected," the Fed said in its notice.

The "advance notice of proposed rulemaking," which is an optional initial step in the sometimes years-long process of making new regulations, seeks comments until March 15.

To read the full notice click:

CONFLICTS, RISKS AND CAPITAL

It is the Fed's first detailed public comment since it shocked the banking industry last July by announcing a "review" of its 2003 authorization that first allowed commercial banks such as Citigroup to handle physical commodities.

U.S. Senator Sherrod Brown of Ohio, who led the first hearing last summer, said the measure was "overdue and insufficient", warning that consumers and end-users risked paying higher commodity prices until new curbs are imposed.

But others saw it as a likely prelude to tough action that would curtail so-called "too big to fail" banks amid a wider political move to restore the historical division between commercial banking and riskier business. Eliminating that divide 15 years ago helped open the door to commodities trading.

"That was the Greenspan era, and it was anything goes as far as activities. Now, we realize that we made a lot of mistakes during the Greenspan era," said Cornelius Hurley, banking law professor at Boston University and former assistant general counsel to the Fed Board of Governors.

Beyond the financial risks, the Fed is also seeking comment on potential conflicts of interest for banks, and the risks and benefits of additional capital requirements or other restrictions - measures that have been hinted at in the past.

The Fed said that new limits on the three ways in which banks may deal in physical commodities were up for debate: the authority to trade raw materials as "complementary" to derivatives; the investment in commodity-related business as arm's-length merchant banking deals; and the "grandfather" clause that has allowed Morgan Stanley and Goldman Sachs much wider latitude to invest in assets than their peers.

The Fed also questioned several previously cited justifications for allowing banks to trade in physical commodities such as crude oil cargoes and pipeline natural gas -- markets in which some banks such as Goldman Sachs and Bank of America's Merrill Lynch are still active.

It said, for instance, that although most banks are not allowed to actually own infrastructure assets, those that lease storage tanks or own physical commodities held by third parties may nonetheless face a "sudden and severe" loss of public confidence if they are involved in a catastrophe.

They also said that several banks' recent moves to sell all or parts of their physical trading operations "may suggest that the relationship between commodities derivatives and physical commodities markets...may not be as close as previously claimed or expected."

While scoping out possible measures to tighten up commodity trading and merchant investment, the Fed offered little insight into how it might level the playing field by narrowing the grandfather exemption that Goldman and Morgan enjoy.

"Our ability to address the broad scope of activities specifically permitted by statute under the grandfather provision...is more limited," Gibson will tell lawmakers.

Legal experts say the provision - which has long been a bone of contention with other banks who had never been allowed to invest in oil tanks and power plants - was widely written. It may require Congressional action to crack down - a seemingly unlikely outcome given the political divisions in Washington.

One legal expert at a private commodity trading firm said the tone of the Fed's notice and mention of catastrophic risks made it almost certain that some form of regulatory action would follow.

"Given some of the things they've said, it would almost make them look bad if they ultimately decided not to do anything," said the expert, who asked not to be identified because they were not authorized to speak to the media.

Deadline looms for mining giants to convince Premier not to cancel Hunter licences

Two Hunter mining companies have until today to try and convince Premier Barry O'Farrell not to terminate their coal exploration licences after a corruption scandal. In December last year, the ICAC delivered its final report to the government which recommended the licences be cancelled due to the taint of corruption. The licences were awarded by former Labor Resources Minister Ian Macdonald, who is facing potential criminal charges over the deals. Mr O'Farrell has given the companies until today to show cause as to why he should not follow that advice.
 The companies behind each licence, NuCoal at Doyles Creek and Cascade Coal at Mt Penny and Glendon Brook, say they are innocent of wrongdoing. Each face a difficult task in persuading the government of the claims. Several former directors of NuCoal's predecessor, Doyles Creek Mining, face potential charges of corruption, as do a number of directors at Cascade Coal. Late last year, the government passed legislation giving it the legal power to revoke the licences. Craig Chapman owns land near to the proposed Doyles Creek mine and says the ICAC have clearly outlined the reasons as to why the lease should be cancelled. "The ICAC released a very comprehensive report in relation to the shenanigans in Doyles Creek and the fact that the exploration licence was awarded corruptly," he said.
 "The licence is forever tainted and naturally we would be hoping the Premier and the New South Wales Government adopts the recommendations of ICAC and cancels that exploration licence." The secretary of the Bylong Valley Protection Alliance, Craig Shaw, says the ICAC have made clear what the future of the licence should be. "We feel that the Mt Penny licence should be, as in Commissioner Ipp's words, expunged from the books," he said. "We agree and Commissioner Ipp has made it patently clear, through his very precise kind of argument, that the lease is so tainted by corruption that it's non-salvagable."

Iron ore mining contract for Western Desert in Northern Territory

Thiess makes a return to iron ore mining having secured a A$135 million three-year contract with Western Desert Resources at its Roper Bar project, a remote greenfield iron ore mine in Australia’s Northern Territory. Thiess has been working with Western Desert Resources for some time, providing on the ground mobilisation and project support since November 2013. The contract has just commenced, with Thiess leading the mining operations.

Thiess Managing Director Bruce Munro said he was delighted to be returning to mining in the region. “Our offering to Western Desert Resources is based on our ability to provide both safe and efficient operations to our client,” he said. “We are very pleased with the flexible relationship that’s been developed and look forward to a successful and long-term partnership.”

Central to the relationship developed between Thiess and Western Desert Resources is a joint vision and commitment to providing opportunities to Indigenous Australians.

Thiess’ Executive General Manager of Australian Mining Michael Wright said the focus from the very outset was to ensure both parties worked together to deliver optimal outcomes for local communities.

“We have a shared strategy with Western Desert Resources to offer Indigenous Australians training and employment opportunities, and this includes a partnership with Rusca Bros Mining, which has a well-established connection with local communities,” Wright said.

The Roper Bar iron ore project is located approximately 600 km southeast of Darwin, with iron ore to be exported from the Bing Bong loading facility.

The project initially involves an open pit operation with a production output of 1.5 Mt/y of ore in its first year and increasing to 3 Mt/y by year three. Associated infrastructure includes a 165 km private haul road to transport direct shipping ore (DSO) to an existing loading facility, on-site workers accommodation and processing facilities.

Initial results indicate the orebody contains a higher grade DSO and a lower grade ore that will undergo initial processing or beneficiation prior to shipping. Under the project’s Mining Lease Application, up to 24 Mt of iron ore will be produced over a nine year period.

Norway's Oil Fund Heads For $1 Trillion; So Where Is Alberta's Pot Of Gold?

The country’s oil fund — which collects taxes from oil profits and invests the money, mostly in stocks — exceeded 5.11 trillion crowns ($905 billion) in value this week, making it worth a million crowns per person, or about $177,000 per Norwegian.

That’s right. Norway, the “socialist paradise,” is effectively running a surplus of nearly a trillion dollars, thanks to oil revenue.

About the same time this happened, the Canadian Taxpayers Federation released calculations showing that the taxpayers of Alberta are on the hook for $7.7 billion in debt, or about $1,925 per person. It expects the debt to spike to $17 billion by the end of the 2015-2016 fiscal year. The CTF is so alarmed by the province’s descent into deficits that it has launched a debt clock specifically for Alberta.

What's wrong with this picture? Norway, with an economy and population somewhat larger but on the same scale as Alberta's, has managed to guarantee its citizens' prosperity for decades to come. Norway's oil production is declining, down to one-half what it was in 2001. Alberta, where oil production keeps growing and growing, is writing IOUs.

Norway isn’t the only one, though its fund is the largest. The United Arab Emirates’ funds are valued in excess of US$800 billion, Kuwait has about US$400 billion, and Russia and Kazakhstan have accumulated about US$180 billion each.

These facts should renew the long-running debate about whether the federal government or the provincial governments of oil-rich provinces should set up the sort of sovereign wealth fund that has made Norway stupendously, incomprehensibly rich.

But are Albertans, or other Canadians, ready for the sort of reforms that would turn Alberta into the new Norway?

In socialist-leaning Norway, oil profits — including from state-run Statoil — are taxed up to a whopping 78 per cent, and that’s where the seed money for the fund comes from.

Alberta, meanwhile, never even had a provincial sales tax. Albertans pay far, far lower taxes than Norwegians, and if conventional economic theory is right, this should give Alberta the advantage.

But does it?

The average total income in Alberta is around $53,000, well below the province's (stunning) economic output of $80,000 per person. Norway's economic output is actually much lower than Alberta's, at $65,000 per person, but its average income is about the same, at $58,000. Norwegians take home a much larger chunk of the economy's wealth than Albertans do.

The Alberta government blames its deficit on the “bitumen bubble.” Oilsands product is selling for considerably less than conventional crude, mostly because of the boom in shale oil production in the U.S. It was selling for 22 per cent less than West Texas Intermediate oil as of this week, and this, apparently, is putting pressure on Alberta's finances.

But this is a sad excuse. Norway, too, has had to deal with low oil prices over the decades, but always found the political will to feed its rainy day fund.

Alberta “was just greedy and decided that a drunken, blow-out dance party today was better than a string of candle-lit dinner parties down the road,” writes noted economics reporter Eric Reguly in Corporate Knights.

Had Alberta set up a proper sovereign wealth fund decades ago as Norway had — or even if it were simply willing to draw higher royalties — it could use that money to stay out of deficits. It wouldn’t have to go begging to the federal government for aid when flooding hits.

This isn’t news to policymakers. The IMF, the Canadian International Council (CIC), and a recent University of Saskatchewan report are among those recommending Canadian governments set up sovereign wealth funds.

“The arguments in favour were just so logical,” said Melanie Drohan, co-author of a CIC report favouring oil funds, in an interview with iPolitics.

It would insulate the economy from commodity price busts, allow governments to save for future generations, and perhaps best of all, “it would keep government spending within their means,” she said. “We wouldn’t have these huge surpluses going into huge deficits.”

Some parts of the country are listening. British Columbia Premier Christy Clark last year announced the creation of a wealth fund that will collect profits from the proposed development of the liquified natural gas (LNG) industry on the west coast.

It won’t be anywhere near the size of Norway’s fund; the B.C. government projects it will collect $100 billion of a projected $1 trillion in LNG wealth generated over the next 30 years. Then again, the LNG business in B.C. isn’t expected to be as large as Norway’s oil business.

But aside from B.C., there is little interest among elected officials. The Harper government has roundly rejected the creation of a federal sovereign wealth fund.

And in Alberta, the idea of a sovereign wealth fund appears to have come and gone. The province came close when then-Premier Peter Lougheed set up the Heritage Savings Fund back in 1976. But the province didn't take it seriously at all. After a decade in operation, Alberta's government basically stopped paying into it, instead drawing on it as another source of revenue. It stands today at a measly $16.7 billion, a tiny fraction of what Norway has accumulated.

Incidentally, the fund's size is about what Alberta’ debt is projected to be in a couple years. The province could just give up the ghost, raid the fund and pay off the debt.

It won’t help make Alberta a more fiscally responsible place in the future, but at least it will temporarily eliminate the unforgivable embarrassment of Canada’s wealthiest, most economically dynamic province showing the world how to waste its wealth.

America’s trade deficit is shrinking. Thank fracking.

Some news Tuesday morning about America's trade deficit bodes well for growth. And there may be bigger lessons about the global economy working its way toward a more sustainable balance.

The United Stated imported only $34.3 billion more in goods and services than it exported in November, down 13 percent from October. It is the lowest monthly trade deficit in more than four years. It was strong enough to lead forecasters to dramatically upgrade their expectations of how fast the U.S. economy grew in the fourth quarter. Macroeconomic Advisers, one leading firm, bumped its estimate of GDP growth to 3.5 percent, up from 2.6 percent before the trade announcement!

The big question for the future is whether this is a onetime blip in the (always-volatile) trade data, or something that will recur. Even more important, does it signal progress toward a more sustainable, balanced global economy in which the United States isn't just the buyer of last resort for all the world's goods?

The improvement in the trade balance came via a slight increase in exports ($1.7 billion) and a larger decrease in imports ($3.4 billion). Most of the decline in imports came about because of a $2.5 billion drop in the value of imported crude oil. That's not just a one-month trend. Through the first 11 months of 2013, crude oil imports were down almost $40 billion, a 13.7 percent drop. There were also large drops in other petroleum products (liquified petroleum gas imports, down $2.2 billion, other petroleum products down $1.6 billion).

So, the domestic energy boom is translating pretty clearly into a more favorable trade balance for the United States, which in turn means stronger overall growth. That may not create as many new jobs as one might hope (see an exploration of that questionhere). But what does it mean for the longer-term project of making a more sustainable global economic order?

The United States was running consistently large current account deficits in the years before the crisis, very likely a contributor to the imbalances that made the financial system vulnerable to the near-collapse in 2008. In short, we bought more stuff from other countries than we sold to them (particularly from Asian exporters of consumer goods and Middle Eastern oil exporters). The money those other countries made from selling us all that stuff was recycled into U.S. financial assets (think anything from the Abu Dhabi sovereign wealth fund to an Indonesian billionaire's holdings of Treasury bonds). That inflow of money into U.S. financial assets pushed interest rates down artificially and encouraged the most interest-rate-sensitive sectors of the economy, particularly housing, to get into a massive bubble.

The broadest measure of whether that kind of imbalance is still a problem is the nations' current account. And there the news is also pretty good. In the third quarter, the country's current account deficit was 2.2 percent of GDP, the lowest level since the start of 2008.

Chevron to clear more land on Barrow Island

Western Australia's Environmental Protection Authority has given Chevron permission to use an extra 10 per cent of A-class land on Barrow Island as the company pushes to finish its Gorgon LNG project.

The company will expand its footprint on the island in a plan that will see the clearing of a further 32ha of land in addition to the 300ha that it was already permitted to disturb.

EPA Chairman Paul Vogel said the proposal was assessed to determine if the existing conditions on the development could be applied to the revised footprint.

"The EPA concluded that the conditions set out in the original approval are effective in managing impacts and should be implemented for the additional development,” Vogel said.

An extra condition of the approval means Chevron will be required to extend a "threatened species translocation and reintroduction program" at the island from 12 years to 14 years.

The extra space will be used for additional laydown and logistical support, with Chevron and its partners hoping it will improve efficiencies at the site.

Logistics on the island have been an issue as strict rules and quarantine requirements that come with working on an A-class nature reserve proving one of the projects biggest challenges.

High labour costs and a strong Australian dollar have also proved testing with the project experiencing massive cost blowouts.

It is now estimated to cost $US54 billion, up from the previous forecast of $US52 billion and is not due to be completed until mid-2015.

Originally the project was supposed to cost $US39 billion and begin shipping LNG in 2014.

Chevron vice chairman George Kirkland has previously said the economics of the project remain attractive.

“We continue to make steady progress against key project milestones and are applying lessons learned to our Wheatstone development which is almost 25 per cent complete,” he said.