It?s apt that CMIC12?s theme is Essential industry for Australia?s future and that Melbourne ? and Victoria ? should be a backdrop to this event. Victoria was an important cog in the Australian economy last century ? and the challenge for the state is to regain the clout it has lost in the last decade to the boom states.
According to Department of Primary Industry (DPI) data, extraction of construction materials is worth $300 million per year to the Victorian economy ? equal to brown coal and more than the combined value of other minerals. There are 876 quarries operating under the Victorian Mineral Resources (Sustainable Development) Act 1990. In 2010-11, 643 quarries reported production of 52.2 million tonnes, up six million tonnes (mt) on 2009-10.
Unlike neighbouring states, Victoria?s rock reserves are abundant ? the supply area for Melbourne alone is believed to have secure reserves for at least 20 years. The close proximity of reserves means that quarries are not as distant from Melbourne and the other regional centres as they are in NSW, where cartage is extremely expensive. This is thanks to basalt plains spanning the state.
In 2010-11, basalt accounted for 34 per cent of the Victorian extractive industries? volume sales for rock types (17.6mt out of a grand 52mt), followed by sand and gravel (14mt), granite (5.5mt), hornfel (3.7mt) and limestone (2.6mt). In dollar sales, basalt constituted $271.5 million of the state?s full aggregate industry earnings of $760 million, while sand and gravel accounted for $195.5 million.
Victoria?s aggregates were poured into multi-size products (road base – 21.8mt sold at $271.8 million), followed by single size products (aggregate, armour ? 14.4mt at $274.1 million), sand products (8.7mt at $130.6 million), limestone products (1.4mt at $28.7 million), clay products (1.7mt at $4.2 million) and dimension stone (7763 tonnes at $1.5 million).
Will the Victorian industry?s volumes and sales decline in 2011-12? DPI documentation concludes that the growth between 2009-10 and 2010-11 may have been attributed to last orders in the Federal Government?s school building program and road and community infrastructure rebuilding after the Black Saturday bushfires and floods of early 2011.
The process for opening new quarries is now more rigorous ? and could also impact on total production and sales. Despite copious quarry reserves, land use conflicts, local government assessment processes and community pressures have in recent years limited new extraction projects.
Indeed, organisations like Boral, Delta Group and Alex Fraser Group have embarked upon recycled aggregates initiatives, with the encouragement of VicRoads, to ensure the sustainability of Victoria?s quarry deposits. These are all factors which will contribute to the industry?s competitiveness but the Victorian Government has, in conjunction with Geoscience Victoria, identified Extractive Industry Interest Areas for use in future strategic planning.
There is concern now that Victoria is faltering. In April this year, Deloitte Access Economics said the flow-on effects of Australia?s two-speed economy and the high Australian dollar had combined to slow down Victoria?s contribution to national output. To offset closures in the state?s manufacturing base and flagging construction activity, the Victorian Government has pledged $5.8 billion this financial year towards infrastructure projects, backed by $901 million of federal funds.
The government has also committed funds to progressing some long term projects that could ?transform? Victoria?s ailing, ageing transport and freight network and is also hoping new, cleaner opportunities with brown coal will reignite the economic ?fire? in the state?s belly.
Time will tell if these initiatives deliver favourable outcomes for Victoria?s construction materials industry ? which makes CMIC all the more fascinating. With a line-up including economist Saul Eslake, AiG CEO Innox Willes, Business Council of Australia CEO Jennifer Westacott and Telstra?s Andrew Scott, Victoria?s competitiveness and the fortitude of the local construction materials sector is sure to be discussed.