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Mine labour costs  too high
Mine labour costs ' too high'

A new report has warned that labour costs in Australia's mining industry are among the highest in the world.

The Minerals Council of Australia report says the latest modelling reveals that capital costs have made new thermal coal projects 66 per cent more expensive and iron ore projects 30 per cent more costly to build than the global average.

The paper, produced by Port Jackson Partners, found that real gross domestic product would be 5.3 per cent lower in 2040 if Australia does not act to boost competitiveness, media reports says.

"Policy decisions made now can create or destroy an economic opportunity equal to more than five per cent of the Australian economy in 30 years, with lower minerals industry growth quickly translating into poorer economic performance," the report said.

The report outlines measures that could be adopted, including halting spiralling wage costs by deploying skilled immigration and sending workers in manufacturing jobs on the east coast to mining jobs in WA.

The report recommended a change in the national dialogue, with less of a focus on how mining wealth should be shared, and instead looking at how the industry could become more competitive.

"Other established minerals producers have acknowledged the importance of minerals sector competitiveness and are taking the need for long-term reform seriously,” the report said.

"Canada has announced plans for a one project, one review approvals process, Chile is driving innovation in state-of-the-art mining techniques, and Brazil has announced plans to modernise its regulatory framework to encourage investment."

Minerals Council of Australia chief executive Mitchell Hooke said rising costs of labour and fuel were putting companies under pressure.

Governments could help tackle this with reforms to project reviews, education, labour force and technology.

"With commodity prices having fallen from peak levels, complacency and backsliding on economic reform pose a real threat to the minerals sector and to the wider economy,” he said.

Competitiveness was a particular challenge for coal and base metal producers, Mr Hooke said, with more than half of Australia’s mines coping with costs above the global average.

Outside the margins of major Pilbara production, iron ore was also less competitive, he added.

Responding to the report, Federal Resources Minister Martin Ferguson said Austrsalia had to keep the cost of delivering mining projects in check for the planned mining investment pipeline to become a reality.

Mr Ferguson said there was $270 billion in committed and $230 billion in planned capital investment in the pipeline.

"The opportunity is still there for the wave of investment to continue, but we have to keep the cost of delivering these projects down,” he said.

Federal Labor MP Andrew Leigh says the Government won’t be supporting a race to the bottom on wages.

“I understand there’s elements of the Minerals Council of Australia that would like $2-a-day wages but Labor is not going to be supporting this kind of race to the bottom in the minerals industry,” Dr Leigh, a former economics professor, said.

“We’re supporting investment in infrastructure, that’s where the revenue from the mining boom is going and we’re supporting a minerals resources rent tax.”

Billionaire Gina Rinehart this month suggested that Australian wages were too high.

In a video posted online, the WA mining magnate said many of her peers believed that Africa, where workers could be hired for less than $2 a day, offered better prospects for investment.

Earlier this year, the federal government sought to discredit preliminary modelling because Angus Taylor, a partner of Port Jackson Partners, was seeking Liberal Party preselection.

Mr Taylor has since been pre-selected for the federal seat of Hume.