CANBERRA, Australia, June 7 (UPI) -- The high cost of Australia's resource projects is posing a threat to the country's economy, a report says.
The Business Council of Australia's "Pipeline or Pipe Dream" report, released Thursday, says iron ore and coal projects cost 38 percent more compared with those in the United States, while offshore oil and gas platforms cost 200 percent more.
The report also says that labor in Australia is 35 percent less productive, as it takes 1.35 hours of work to complete what would take one hour in the United States.
By next year, the report says, 30 percent of Australia's economic activity will be tied to the success of $921 billion worth of resources, energy and infrastructure projects.
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"The bottom line is that our high cost structure in Australia and low productivity, is risking this massive pipeline of $921 billion worth of projects, which is in fact the thing that is underpinning our economy," BCA President Tony Shepherd told The Australian newspaper.
"These projects have to be delivered cost efficiently, in a timely manner, if we are to reap the full benefits of the resources boom."
Shepherd called for faster project approvals and improved training for workers.
"We are becoming a high-cost and thus (a) high-risk place to invest, and low labor productivity compared to other nations has reduced the competitiveness of our project delivery," he said.
Separately, a report this week from the Commonwealth Bank of Australia also points to the high costs associated with Australia's resources boom, specifically thermal coal production.
Australia is the world's largest exporter of coal.
The government expects total coal exports -- both thermal coal and metallurgical coal -- for the fiscal year ending this month to reach 310 million tons, equal to $46.7 billion.
Commonwealth calculates the median capital intensity -- the total profits from sales divided by the total amount of capital invested during that same period -- for Australia's thermal coal projects at $141 a ton. That compares with South Africa at $99 a ton and Indonesia at $56 a ton.
Since 2007, the bank report says, the capital needed per metric ton of output has risen at an average nominal rate of 25 percent annually since 2007.
Because of the high cost of developing projects in Australia, the bank's analysts wrote, "higher coal prices are likely to be required to bring new Australian projects online relative to non-Australian projects."
The report also warns that demand from India and China could fall: India's new coal-fired power stations face construction delays, and China has started to exploit massive thermal coal resources in Xinjiang and plans to boost thermal coal output in Shanxi.
As for Japan, contrary to expectations that it would rely more on coal-fired power following the Fukushima nuclear power plant disaster, the Commonwealth report notes that Japanese utilities have instead chosen to rely more on natural gas: thermal coal use decreased 3 percent last year while liquefied natural gas purchases soared 56 percent.
