The export-driven growth model followed by Australia’s mineral sector for years is now up for a review. Amid rising energy prices, Australia’s manufacturing sector wants a part of the nation’s gas resources be reserved for the domestic industry at a cheaper price.

Their demand, however, is strongly opposed by the Australia’s minerals lobby, says Melanie Stutsel, Director – Health, Safety, Environment and Community Policy of the Mineral Council of Australia. She was talking to journalists in Kolkata on Wednesday.

Australia is the third largest producer of natural gas and the fifth largest seller of liquefied natural gas (LNG). Any reservation of the resource would limit the profit potential of the country’s gas sector. A large part of the oncoming LNG capacities, based on new gas such as coal-seam gas (also called coal-bed-methane) and shale gas is priced exorbitantly to tap high demand for energy from Japan.

Priced over $18 per million British thermal unit, on long-term contracts, this is the most expensive gas in the world. A section of Australian Business Council, the apex industry body in the country, feels such a high energy cost would make the country’s manufacturing unviable, according to some reports.

The manufacturing sector’s demand is not new. The spike in energy prices had forced some of the large emerging economies such as Indonesia to impose restrictions on export of mineral resources. Some others, like the electricity trade in South Africa, are raising questions on the current open market mineral trade regime.

Stutsel, however, feels the abundance of energy resources in Australia may not particularly underscore the need for a reservation policy. “We have not been very good at manufacturing. We will soon be importing our cars from countries like India. Also, we have a wide basket of vast energy sources right from uranium to coal seam gas or coal mine methane. Given this, it’s hard to justify reservation,” she said.

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