28 June, 2021
Resource businesses in firing line of big insurers and lenders
A growing number of small to medium-sized businesses that service the resources sector are having significant problems securing finance and insurance because of recent climate change-related policy changes by banks and insurers, the Queensland Resources Council (QRC) said last Friday.
QRC Chief Executive Ian Macfarlane said Queensland businesses which support the state’s $82.6 billion resources sector, particularly the all-important Mining, Engineering and Technology Services (METS) sector, are being disadvantaged.
“Insurers and banks are increasingly trying to appease activist shareholders by reducing or cutting ties with operators connected to resources,” he said.
“In some cases, insurance premiums are tripling, and the cost of credit is
skyrocketing simply because a business is supplying goods or services to the resources sector,” he said.
“The irony is that by restricting the ability of METS businesses to renew
their insurance policies and access finance, these lenders and insurers
are threatening the viability on the very sector that will play a
leading role in Queensland’s transition to a low-emissions future.”
In a presentation to the Joint Standing Committee on Trade and Investment Growth Inquiry today, Mr Macfarlane said if resources-related businesses can’t get finance or insurance at a reasonable rate, jobs in the industry will be lost.
"Through our submission, the QRC is giving a voice to service companies, many of which are based in regional areas, to send a message that jobs will be
lost because of increasingly unfair banking and insurance practices,” he said.
A recent survey of QRC supply chain members, representing a combined workforce of 7,600, found:
- 75 percent said accessing banking or lending services has become much more difficult in the past two years;
- 44 percent said that if these banking costs stayed at these levels for the next five years, they would be unlikely to continue operating;
- 90 percent said they had experienced a major change in insurance as a result of working in the resources sector.
Mr Macfarlane said the QRC supports the Paris Agreement and emissions’
reductions targets, and that Australia’s well-regulated and
environmentally sustainable resources sector can continue to thrive
while meeting these targets.
“Queensland is abundant in resources and has the potential to become a global renewable and
low-emissions’ energy superpower, but resources companies need a viable
METS sector to provide technical expertise and innovation to support our operations,” he said.
“The QRC hopes this inquiry will encourage the banking and insurance sectors to work with their regional clients to implement practical reforms that will lower emissions and help keep exports rolling.”