Why Gladstone industry can look forward to a good year

INVARIABLY, Australia's resources are flogged in US dollars.

News that the Australian dollar is settling at around 80 US cents promises great relief to our producers facing a global collapse in prices for oil and LNG, iron ore, coal and any metal you can name.

As I have written previously, the collapse is down to a slowdown in China, increased production of oil by the US using 21st century technology and the reluctance of the OECD oil cartel headed up by Saudi Arabia to cut back production.

Given that Gladstone's future is largely tied to the export of coal and the production and export of LNG, it's time to rejoice.

The cloud of uncertainty has been lifted. I'm fair dinkum.

And it's good news for our manufacturers, what's left of them anyway, after the closures announced during the year, simply because the cost of imports will now rise in line with the fall in the value of our currency on the cross rates.

Gladstone's fabricators and service providers to the mining industry for example should be able to step up to the plate as the dollar cost of competing imports from the US and Asia falls.

Theoretically, it will also provide a fillip to our retailers.

Prices for stuff bought via the internet should rise, notwithstanding the new Assistant Treasurer, Josh Frydenberg, announcing on Boxing Day that he'll be reviewing the exemption from GST of goods bought from overseas.

A tip: if you're looking to buy expensive computer equipment, whitegoods, motor vehicles and the like, now might be the time to make your move.

The fall in oil prices and the decision by the OECD to stick to current production levels is something of a two-edged sword for Gladstone's economy.

LNG prices are linked to the Brent (North Sea) barrel price so it follows that lower oil prices will put pressure on our three Curtis Island producers.

On the other hand, the Reserve Bank's success in talking down the dollar has lessened and will continue to lessen the impact.

At a less esoteric level, once Gladstone's fuel retailers bow to the pressure of public opinion and get with the rest of the country in passing on reduced fuel prices ordinary Gladstonites are going to feel a little bit richer. Good for retailers.

So it strikes me that Gladstone looks set to have a good 2015.

On December 27, our new era of production-based prosperity was heralded when LNG ship Methane Rita Andrea docked.

After some final commissioning touches, it left for Singapore laden with 140,000 cubic metres of LNG. First cab off the rank.

Other good news that may have an impact on our local construction workers' future job prospects is the announcement by Indian giant Adani to engage Downer EDI to develop its CQ Carmichael coal mine scheduled to begin production in the second quarter of 2016.

The thermal coal produced will feed Adani's own power stations in India, so the ebbs and flows of coal prices will be largely irrelevant.

Similar opportunities for our people should also follow the recent announcement by Santos to ramp up its gas production in the Surat and Bowen basins, meaning 1700 construction phase jobs and 200 operational jobs.

As I throw these positives into my crucible and stir, I can certainly see a good year ahead, much improved on 2014.

Keep your eyes peeled for future announcements. In January we will be moving to Goondoon St, opposite Hog's Breath.

Bob Lamont is director of Corporate Accountants situated at the Night Owl centre. He can be contacted at boblamont1947@gmail.com.



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