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Focus study: The case of the Gordonstone mine

This tutorial was written by Peter Dean
Georges River College
Oatley Senior Campus
Outcomes
Background to the Gordonstone mine dispute
Enter Rio Tinto: the world’s
Counting the social costs
The mining industry
More

Outcomes
A student:

H2 analyses relationships within and between social and cultural groups

H3 accounts for cultural diversity and commonality within societies and cultures

H5 evaluates the influence of power, , gender and technology on decision-making and participation in society

H7 applies appropriate language and concepts associated with society and culture

Extract from Stage 6 Society and Culture © Board of Studies NSW, 1999.

The changing shape of industrial relations in Australia

With the Federal Liberal government in power, John Howard and his former Industrial Relations Minister, Peter Reith
set about radically changing the structure of the Australian labour market. Their goal has been to establish a
decentralised, flexible labour market based on individual contracts between employer and employee. This system, by
necessity, also calls for the de-unionisation of many workplaces, especially in industries that have, traditionally, very
strong union representation, e.g. the Maritime Workers Union (MUA) and the CFMEU (Construction, Forestry,
Mining and Energy Union).

The centralised wage fixation system, set up under the Hawke Government, involved a high degree of union
involvement and established the Australian Industrial Relations Commission (AIRC). By 1996 this system had been
replaced by a decentralised system in which unions were increasingly dealt out of the picture. The Australian Industrial
Relations Commission had its powers curtailed and unfair dismissal laws were amended to favour the employer. Youth
and age-based wages are to be maintained, despite the inequitable outcomes for young Australians. Laws will, and
have been passed, to restrict the rights of workers to strike and their ability to join a union. All of which contravenes
the United Nations charter on freedom of association.

Along with the changes to industrial legislation, there came Federal Government sponsored attacks on the union
movement. The most publicised and well known of these disputes, was the direct government intervention in the

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Patricks – MUA dockside dispute. Despite the Minister’s denials, collusion between the Government and Patricks to
oust the MUA was proven in court. Peter Reith’s tactics, strategies and direct cooperation with Patricks’ chief, Peter
Corrigan, lead to a protracted and at times violent confrontation in Australia’s ports. The end result was a legal and
moral victory for the unions, with the courts declaring Patricks’ manoeuvres illegal. Patricks was forced to reinstate the
unionised workforce.

The second wave of industrial relations reforms saw a reduction in the award conditions of workers, to contain only
“basic wages and conditions”. Furthermore, the ability of unions to represent their workers has been restricted further.
Jenny George, the former Australian Council of Trade Unions (ACTU) President argued, that Peter Reith planned to
introduce legislation that contained an onslaught on the “workers employment conditions… the fact is that these
proposals will mean that …the living standards and job security of… employees …will continue to fall”.

The position of Jenny George and the union movement in the workplace stood at odds with the Federal Government’s
vested interests. As Peter Reith expressed, at a business lunch in Perth, during July 1998, “Never forget the history of
politics. And never forget which side we’re on. We’re in the side of making profits. We’re on the side of people owning
private capital”. This clearly illustrated the different attitudes that the union and the Federal Government possess.

Background to the Gordonstone mine dispute

With all the fanfare, media coverage, government involvement and scandal, the dispute between Patricks Stevedoring
and the Maritime Workers Union is an industrial dispute that all Australians are familiar with. With the easing of
tension and court resolutions, the dispute has now faded into industrial relations history as one of the epic union
victories. Despite this, many other disputes continue unabated around the country, without the constant media attention
and government involvement. The tyranny of distance caused by the remote locations of some of these disputes means
they go all but unnoticed to the public at large. One of these disputes has been over the Gordonstone mine in central
Queensland.

The Gordonstone mine is an underground black coal mine situated near the town of Emerald in central Queensland.
The mine was opened in 1991 with the claim that it was the “most technologically advanced mine in the world”. The
company was owned and operated by ARCO who was the senior partner with an 80% share in the mine. The other
20% being made up of Mitsui, a Japanese coal trader and an Australian company, MLC.

By 1996, the unionised workforce represented by the CFMEU (Construction, Forestry, Mining and Energy Union:
Mining and Energy Division), had the record-breaking world production records for underground coal mining. The
owners of the mine were so impressed by their employees that they erected a two metre statue in the workers’ honour
declaring the workforce “the best miners in the world”.

With the introduction of the conservative Federal Liberal Government and the policies of the Industrial Relations
Minister, Peter Reith, the mine owners devised a strategy to de-unionise the workforce in an attempt, according to the
union, to reduce wages and conditions at the mine. With the implementation of the government’s new industrial
relations laws in January 1997 the company commenced implementing their strategy.

By October 1997, the attempts to break the workers’ association with the CFMEU had failed, and as a result, the
company sacked its entire workforce of 312. “The best miners in the world” were now all out of work and the
company promptly pulled down the statue and buried it somewhere on the mine site. ARCO kept on its management
team of 100 and set about recruiting a new workforce on individual contracts. The matter was taken up in the
Australian Industrial Relations Commission (AIRC) who ordered ARCO to give the sacked miners preference in
employment. ARCO refused to re-open the mine on these terms. The dispute then became tightly wrapped up in legal
manoeuvres, while the sacked miners instigated a picket line against the mine.

As a result of the impasse between ARCO, the CFMEU and AIRC, the mine sat idle. In February 1998, AIRC found
that the mine owners had deliberately tried to de-unionise the workforce and that they were motivated by a desire to
avoid its obligations under the 1996 agreement with the CFMEU. In July 1998, the company again tried to re-open the
mine with a new workforce. Again the AIRC ordered that the company must give preference to the sacked workers but
ARCO stood firm by refusing to operate under these conditions.

Enter Rio Tinto: the world’s largest mining company

In October 1998, ARCO announced that it was to sell the Gordonstone mine to Rio Tinto for US$150 million, $50
million less than other offers that had been made. Rio Tinto argued that it had no agreement with the workers
employed under the previous mine owners. They commenced recruiting for the Gordonstone mine based on a non-
unionised workforce. Employees were allowed to belong to the CFMEU, but they were not to be present in nor have

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any say over the contract that was entered into between employee and employer. This effectively shut the union out of
the mine.

Rio Tinto commenced recruitment based on a $1 shelf company. This company is a subsidiary of Rio Tinto’s Pacific
Coal Pty Ltd, however Pacific Coal does not manage the mine, the subsidiary does. The $1 shelf company is registered
as Kestral Coal Pty Ltd. This company has a single share registered to Erin Feros in Brisbane. Erin Feros has no say in
the running of the mine, which is controlled by the two directors of Kestral, Brian Fredrick Horwood and Colin Stuart
Marshall, both of whom are directors of Pacific Coal. As Reg Coates of the CFMEU argues “Rio Tinto is pulling a fast
one here. It is doing what Chris Corrigan did at Patricks during last year’s MUA dispute”. At Patricks the entire
workforce, without their knowledge, was transferred to subsidiary employment companies that were then declared
bankrupt and insolvent after the contract to provide labour to Patricks was discontinued. As a result the workers were
sacked and lost all of their entitlements.

Rio Tinto argues that they have no agreement, nor obligation, with the former ARCO employees and their official line
is that they are employing on merit and don’t care if the applicants worked for ARCO or whether they are in a union.
Their policies and conditions of employment however have shut the union and collective agreements out of the
workplace. When asked if he would meet with the representatives of the CFMEU and the sacked miners, Rio Tinto
mine manager, Ross Hanagan argued, it would not make sense to meet and negotiate with people who are not
employed by the company and in the end the mine “is not a social experiment, it’s a business”.

The tyranny of distance ensured that the Gordonstone dispute did not receive the same publicity as other disputes such
as the waterfront confrontation. The mine returned to operation with its non-unionised workforce, but the dispute
continued.

Counting the social costs

For many of the residents of Emerald, they are not interested in the finer points of industrial law or of the respective
finer points of the arguments of the union or the mine owners. What they want is the workers to get their jobs back and
the mine to run at full capacity. With the mine closed for close to 20 months and reopening at below peak efficiency
both the unemployed workers and the town suffered. Many businesses in the town closed and real estate prices fell.
The dispute led to bankruptcies, family breakdown and suicide. The local Salvation Army chaplain received reports of
three attempted suicides at the start of the disputes and relates numerous cases of family breakdown. Many families
barely scraped by while numerous mining family members required counselling or medication.

With the battles for legal rights many of the social costs go unreported or unnoticed. But for the residents of Emerald
these incidents became a way of life for well over 20 months. The battle for the Gordonstone mine led to high
unemployment, a loss of self-esteem, effects on the identity of individual workers, their families and the community as
a whole.

The mining industry

The Australian mining industry faces stiff competition from Indonesia, South Africa, USA and Canada. This has led to
increased competition, decreased profit and increasing pressure to reform the industry. In a conference in Sydney, the
coal industry said that it faced problems of bad management, bad infrastructure and high government charges.
However, the main problem that the industry faced, it was argued, was inflexible work practices and a militant union.
The Federal Government couldn’t agree more. As Peter Reith argues “the CFMEU has been a difficult and reluctant
union …a militant union”.

To place Gordonstone in context it must be understood that all over the mining industry there has been industrial action
to reform work place practices. However the action taken by ARCO and Rio Tinto has not necessarily led to the
achievement of the best possible results or best practice. At Oakey Creek, one hour from Gordonstone, negotiations
between the mine owners and employees over work practices went for over a year and at times were hostile. In the end,
an enterprise agreement was reached between the employers and the unionised workforce. The result has led to the
mine turning from a loss maker into a profitable business.

Many mines in Australia are losing money, shedding staff and cutting costs, but at Gordonstone the mine was breaking
records and the sacking of the workers was in clear breach of Peter Reith’s industrial law. The Minster, despite
admitting that the sackings were wrong, would not defend the CFMEU, but he was willing to forget, and it may be
argued, forgive ARCO and Rio Tinto and move on.

Gordonstone has taken a unique place in the industrial relations history of the country, as the longest running coal
industry dispute. It clearly divided the Gordonstone workplace into its rival camps. The management and Federal

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Government were bent on the destruction of trade unions and the creation of an employer friendly and flexible
workplace, that they claim is necessary for the industry to survive and prosper, given the high level of local and
international competition. On the other side, stands the CFMEU and the union movement, fighting for the right to
represent their members and claim fair and equitable conditions and pay. Where Gordonstone stands as an anomaly in
the industry, is that it was a profitable mine that was breaking world records. Despite this the owners were bent on the
destruction of the union with both legislative and moral support from the Howard government. However as both the
Gordonstone (under ARCO prior to their sacking) and Oakey situations highlight, an enterprise agreement with the
union can still achieve satisfactory goals for the owners, operators and employees.

At Gordonstone, the union and Rio Tinto stand firm and the struggle goes on in both the courtroom and on the picket
line. As Tony Maher, president of the Energy and Mining Division of the CFMEU, argues:

“They may have buried the statue,

but they can’t bury the truth,

And they wont bury the Union.”

More
The majority of information for this article was researched from the following sources:

• SBS Insight program, August 1999 “Gordonstone mine dispute”

• “Reith’s new challenge” in Honi Soit, No.32, p.11.
• Construction, Forestry, Mining and Energy Union
• Rio Tinto
• Australian Bureau of Statistics

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