Tas mining challenges about iron ore price not just green threat: economist (ABC)

The halt to a Tasmanian iron ore mine has prompted a warning from a leading economist about the endemic issues confronting the small Tasmanian mining sector.

It comes as MPs blame each other for the indefinite stop on another mining project.

Venture Minerals has suspended work at its Riley Creek project, near Tullah, citing legal challenges by conservationists and the falling ore price.

Its statement to shareholders said: "Ongoing appeals have delayed the project and in turn deprived shareholders and the local Tasmanian community of this opportunity."

The Opposition is accusing the Government of acting too slowly on a plan to limit appeals against mines.

In Parliament, Opposition Leader Bryan Green asked the Government what it was doing in response.

He cited comments by Liberal MP Adam Brooks before the March election that green groups would not derail the Venture Minerals project if the Liberals were in charge.

"Neither save the Tarkine, nor other green front group would have the right to delay, frustrate or even kill off mining projects he said."

Premier Will Hodgman promised progress.

"We are reducing the capacity of people like your former cabinet colleagues to get in the way and make vexatious and frivolous appeals," he told Parliament.

Venture mine halt not surprising: Richardson

Deloitte Access Economics director Chris Richardson said he was not surprised by Venture's decision.

The nearby Nelson Bay River iron ore mine owned by Shree Minerals also went into care and maintenance mode earlier this year, citing economic conditions.

Mr Richardson said the spiralling iron ore price would have been a very significant factor in the Venture Minerals' decision.

While there is optimism within the state's political ranks that the price of ore will come back, Mr Richardson said there was a general consensus that that was extremely unlikely.

"At the moment we've got an iron ore price of about $US93 per tonne, that's better than the lows we've hit earlier this year," Mr Richardson said.

"But it's pretty ugly compared to where we began the year.

"Iron ore prices are down, and chances are they're staying down."

Transport costs adding to sector's challenge

Mr Richardson said today's iron ore price was a problem for any mine, or potential mine, and shipping from the north-west added to the cost.

"There was a phase a couple of years ago where those prices were magnificent and people believed they would stay magnificent," he said.

"Not surprisingly a variety of mines have been under consideration since then."

He said Tasmanian mines were particularly susceptible.

"The simple rule of thumb, is that the cheaper you can get stuff out of the ground and to China, the better your chances," he said.

"In Tasmania the prospects aren't quite as good because mines aren't as big, the economies of scale aren't quite there."

The decision to mothball the Riley Creek project would not have an immediate impact on the state's budget, but would have broader economic ramifications.

Mr Richardson said the entire mining industry only accounted for about 1 per cent of the Tasmania's total revenue.

"It is part of an ongoing economic challenge to Tasmania."

"By and large it is a small market, and even in things like iron ore if there are smaller operations selling to markets that are a long way away, then economies of scale are part of that equation.

"In a world that's globalising, transport costs are still something of a killer for Tasmanian gross prospects."

The mining industry on the state's west coast has been under increasing pressure, with the recent closure of the Mount Lyell copper mine and the forecast closure next year of the nearby Henty gold mine.

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