27 July 2012
Incitec Pivot chief James Fazzino says ALP’s failed to take advantage of the gas boom
The Australian
Incitec Pivot chief James Fazzino has accused the Gillard government of lacking the vision to take advantage of its gas interests.
“For me, it’s illogical and short-sighted that Australia is not leveraging our abundant gas resources for the greater national interest,” he told an American Chamber of Commerce in Australia lunch in Sydney yesterday.
Mr Fazzino said there were fundamental differences between how Australia and the US viewed the access and affordability of energy, in particular gas reserves. “The US sees its gas reserves as an enabler for value-added manufacturing, and this is revitalizing their economy,” he said.
Mr Fazzino said the US proposed developing its energy reserves in support of manufacturing jobs, but Australia had “naively allowed the unfettered export” of gas and was missing a big opportunity to retain gas reserves, or at least a larger portion of them, onshore.
“In Australia we have abundant gas, but our lack of vision means it will be processed through giant refrigerators up in Gladstone and sent overseas for others to value-add,” he sid. Australia was one of the few countries with an unregulated gas market, allowing unrestricted access.
As productivity in Australia continued to decline, basic inputs into manufacturing were critical for the future of the economy, he said. Downstream value-adding was a compelling proposition for Australia through more jobs, rewards for shareholders and taxes for government.
“If you take a molecule of gas and you stick it through one of those plants in Gladstone you increase its value by four times,” Mr Fazzino said. “If you took our company as an example and you took that same molecule of gas and produced a high-end explosives emulsion, you increase its value by 20 times.”
Australian companies such as Incitec Pivot were making choices about their ongoing operations and future investments, he said. It was considering a new ammonia plant in Louisiana rather than Australia.
“The difference for me is actually the vision of the government in the US, which is committed to locally competitive priced gas and the lack of vision in Australia…we should be promoting the availability of energy as our natural competitive advantage,” he said.