The McKell Institute has issued a stark warning in its latest report, highlighting the threat posed by the unfair trade practices of the Chinese Communist Party (CCP) to Australia’s metal smelting industry. The report forecasts that if the federal government does not take decisive action soon, the CCP’s strategies could devastate the industry, leading to the loss of 73,000 jobs.
The report reveals that China’s industrial subsidies currently surpass its defense spending, and its dumping of low-priced goods is creating substantial pressure on the global market, particularly affecting Australia’s metal smelting sector. The industry is facing unprecedented challenges due to the impact of cheap Chinese products, putting approximately 73,000 jobs in metal smelting and refining precincts across Australia at risk, with around 55,000 workers directly employed in the sector.
According to the report, China’s short-term geo-economic strategy aims to export heavy industrial capacity globally, while their long-term objective involves weakening the survival capabilities of key manufacturing industries in competing economies, including Australia.
The CCP’s strategy involves enhancing competitiveness through government subsidies and flooding global markets with cheap products, ultimately forcing mines and smelters to shut down, leading to a ripple effect that could result in the loss of essential labor, technology, and industries in Western democratic nations. The eventual consequence could see China becoming the dominant player in the market.
The report emphasizes that other countries have recognized this threat and are taking countermeasures to protect their economies. It stresses the importance of maintaining metal processing and refining capabilities to withstand future economic shocks, highlighting the significant risks Australia faces if it loses these vital capacities.
McKell Institute CEO Ed Cavanough stressed the urgent need for a clear understanding of China’s intentions and their impact. He highlighted the vulnerability of South Australia, particularly pointing out the potential consequences if the Port Pirie smelter were to close, estimating a possible initial population decline of around 2,000 residents, representing 11%, with the most economically productive members likely to relocate.
The report estimates significant population declines in towns such as Whyalla, Mount Isa, and Port Kembla due to China’s product dumping. It also criticizes the ad-hoc approach of individual smelters receiving protection when threatened and emphasizes the need for a sustainable, comprehensive strategy to address the challenges posed by Chinese trade practices.
Recently, the Labor government announced funding to assist mining exploration and development company Liontown with $50 million and a $135 million rescue package for international metal producer Nyrstar’s factories in Hobart, Tasmania, and Port Pirie in South Australia, which have been severely impacted by cheap Chinese imports.
The Whyalla Steelworks in South Australia continues to seek new buyers, while calls for Labor intervention to support Glencore in potential closures of copper smelters in Mount Isa and Townsville persist.
To date, Australia’s nickel industry has suffered from the influx of cheap products from Indonesia and China, with an estimated loss of around 10,000 jobs or jobs at risk. The McKell Institute stresses the need for a holistic government response, suggesting a review of anti-dumping regulations to prevent the influx of cheap goods and advocating for restrictions on scrap metal exports for recycling to retain these activities domestically.
The report also calls for incentive measures to retain smelting and refining industries locally, recommending the allocation of funds from the National Reconstruction Fund to support these sectors. Additionally, the government should consider establishing reserve policies for east coast natural gas to reduce energy costs.