Guys theses are not renewable resources. They come they rape our land an leave.

This is not trees and banking.

So a few jobs will be lost in the short term, whilst the mining companies try to scare us by putting their investments on hold.

This is just a bluff. They just cant go anywhere and get this, so in the end they come back.

What we as a nation have to do is get behind and support the government, help them nototiate better terms for our future and not let these guys pull the wool over our eyes.

Dont be naieve. Its so short sighted to let these mining companies strip us of our natural wealth for a bargain. And we let them do it to us again and again.

Costs of natural resources are going up, and so will their profits. So as the price of a barrel goes through the roof, how long do you think they can sit on their hands and avoid investment? How long will they wait for the goverment to back down a few %.

Its billions they will miss out on in the wait. Its who will flinch first with this.

They are spending big in the media and any outlet they can to lobby their cases, to try to convince the voters the govenments got it wrong so that they can save a buck. Some of us wont fall for it. Others will as we can see from the media reports.

Currently I pay more tax % wise than any of the mining companies. I am in the higest percentile. In the process of earning a living I dont destroy the environment, and i continually invest in Australian business purchsing australian goods and produce.

Mining companies take and give little back apart from the people that they employ.

But what happens when the resources run out? Where will you work then? Think the Mining company will keep paying you when the well dries up? Who will be paying your unemployment benefits?

The government will. I will. We all will.

My Comments.

Disclaimer:
1. I consult to several mining and allied companies
2. I own shares in mining companies

I think this proposed tax is completely wrong on a number of grounds.

1. A return on investment of 6% is not 'super' - I would be better putting my money in bonds. The weighted average cost of capital WACC should be used as any benchmark defining project profitability.
2. The method of introducing this tax was appalling to say the least. If the Govt had undertaken an appropriate level of consultation and review they may have realised just what they were thinking about.

3. The impacts of this announcement are immediate. I have already had one major project (that more than likely would have resulted in me hiring someone to help deliver the project) has been put on hold.

4. Other projects we have with mining companies are being delayed.

So in selfish sense that means less money for me, hence I spend less (less windsurfing gear) and...... It also means less job creation, less money circulating, less growth.

For anyone in any doubt, go and visit a large regional centre (like a Mt Isa) and just walk around town and see what an impact that the mining businesses are.

I am not opposed to the Govt re-assessing tax returns from mining to ensure that we get a fair share but the current approach is just utter rubbish, we need an approach that will allow our mining and extractive industries to remain globally competitive.

KRudd is grasping at straws

Dr J

jermaldan said...

Guys theses are not renewable resources. They come they rape our land an leave.

Some would argue that the way we log, farm and fish is not sustainable (let's call it raping our land and water with no regard for the environment) and threatens the renewable nature of these resources...

It is true that once something is mined it is gone... This is definately the case for coal... It is not necessarily the case for other commodities... An ore deposit is a natural accumulation of minerals that can be economically mined. Changing technologies, supply/demand and commodities are constantly changing the boundaries of known ore deposits.

Take iron ore as an example... The grade specifications (Fe, SiO2, Al2O3, P and LOI) have changed over time. Australia now sells an inferior product to what we sold 20 to 30 years ago. This has meant that more iron mineralisation is can now be defined as "ore" and sold.

So a few jobs will be lost in the short term, whilst the mining companies try to scare us by putting their investments on hold.

This is just a bluff. They just cant go anywhere and get this, so in the end they come back.

There are those projects which are in doubt because of the ability to re-pay debt... Only a few posts back I mentioned FMG's Solomon Hub... check it out... The bankers have told FMG that when the tax is introduced, they will not be able to re-pay the debt need to finance the project... The option for Twiggy? Sell to the Chinese...

There are also the $600 million of Xstrata projects in Queensland... I am not the full bottle on this... It is not in my backyard...

Look, I agree with Australia getting more benefit from it's resources, but not by taxing the profit.

Company profit and personal income tax is not a great analysis.

A company has to invest significant capital to make more profit. You do not have to invest the same level of your income to increase it. You don't have the same ability to decide you income destiny as a company does. As an employee you are more constrained to a limited income band. Generally you cannot earn less by making risky decisions, your income is far more stable and protected.

Do we really want to have a principal that taxes success and reward failure ?

I see the solution to getting better value to be in gaining revenue from the mining process, not revenue from somebody else's ability to make profit thorugh efficiency and innovation.

By your own arguments higher royaltese or additional costs in the mining process would encourage better mining and processing techniques to obtain more mineral from less ore. This would then also 'rape' the planet less.

But OK, I'll come around and agree it is a great idea. Now, what exactly was the money going to be spent on ? Something that will mean when the resources run out Australia will still be rich ? or something to maintain the current government in power post the next election ?

Pugwash said...
Only a few posts back I mentioned FMG's Solomon Hub... check it out... The bankers have told FMG that when the tax is introduced, they will not be able to re-pay the debt need to finance the project... The option for Twiggy? Sell to the Chinese...

You are definetly getting my vote Pugwash.

There is nothing wrong with the liquidity of FMG's project. It is the interest on the capital that is the issue, due solely to the large capital required.

If the Aussie government financed it at bank base rate, and took a true percentage stake, suddenly it becomes possible and returns not only tax but dividends to the Government.

Refer to Rio's issues financing their debt not so long ago. Same thing. They were willing (for a while) to forgo 15% ownership for re-finance of debts at market rate. They were very able to make the repayments, just not able to find anyone with enough cash to lend them the total. 15% ownership of Rio would be better for me than 40% supertax.

Sino Iron is spending $5.5 billion on the Cape Preston Magnetite project. Financed by Chinese state owned entities, to then be 100% owned by Chinese state owned entities.

It will pay aussie tax, and proposed aussie super tax, but it would pay way more if you replace the word chinese with the word australian in the above.

You'd think so... hey mineral... particularly as it is sold as being after capital... Anyways... we went through this in another topic, and this is not the case: www.seabreeze.com.au/forums/topic.asp?TOPIC_ID=65856&whichpage=2

Pugwash said...

Time to revive this one...

Hey Panda, Twiggy seems a little lost as well...

Below is an extract from an article in today’s Mining News:

FORTESCUE Metals Group chief executive Andrew Forrest says there is no way the company can finance its $US9 billion ($A10.56 billion) Solomon Hub project and may be left with no choice but to sell its flagship project to the Chinese.

Forrest said today’s decision to suspend the Solomon and Western Hub expansion projects was very difficult, but was made after an intensive review and meetings with financiers.

Chairman Herb Elliot told Forrest that there was no other option but to make an announcement to the market regarding the suspension of the projects.

Forrest said it was particularly difficult given how bullish the company has been recently about its expansion plans.

“I’ve been mocked and accused of being the eternal optimist and I stand guilty of that charge,” he told journalists.

He said bankers who were once excited about FMG’s expansion plans were no longer excited due to the proposed tax.

“They’re in the real world – the tax is not,” Forrest said.

FMG revealed today that its plan was to establish a debt-funded capital platform utilising equity derived from cash flow from the Chichester Hub, which would now be severely impacted as a result of the proposed tax.

Forrest said what devastated him most about the tax was that it would be applicable before companies had a chance to pay back project debt.

The development of the Solomon Hub includes the proposed Pilbara port at Anketell Point and a new rail line, with the project flagged to produce 160 million tonnes per annum from 2013-14.

The suspension of FMG’s expansion projects will affect up to 30,000 direct jobs and thousands more indirect jobs in support industries…

The article continues…

There is something else that is interesting and yet to fall out... I touched on it before... the government looks at GOS when reporting tax paid by miners. The mining companies are reporting tax paid based on taxable income... Anyone want to guess which part the government are going to tax

Here is the answer to the 40% rebate: http://www.futuretax.gov.au/documents/attachments/Announcement_document.pdf

4.4 The treatment of Resource Super Profits Tax losses

RSPT losses will be carried forward with interest to preserve their real value. An RSPT loss occurs when project costs, including the RSPT allowance, are greater than the project's receipts in a given year.

While losses may not be immediately refunded, the government will guarantee to provide a tax credit for unutilised losses even if the entity goes out of business.

Qualifying expenditure incurred within a year can be transferred from the loss making project to other profitable projects within the entity or company group. Where there are no other profitable projects, the loss will be carried forward.

Carry forward losses, included in the RSPT capital account, can be used to offset future assessable resource super profits within the entity or wholly owned company group. The amount that can be transferred out in a year is limited by the amount of assessable RSPT profit in other projects owned by the entity or within the company group. That is, transferred losses cannot drive the RSPT assessable profit below zero.

The RSPT value of losses will be refunded on a reasonable basis. For example, losses would be refunded when a project is closed and the loss cannot be transferred to another project.

Under the RSPT, the government effectively guarantees to give resource firms the benefit of 40 per cent of their extraction costs on the equivalent of a cash-flow basis (the RSPT allowance preserves the real value of the benefit). That is, it guarantees to provide relief for expenditures incurred on a project, including the possibility of a cash refund. In return, it will receive 40 per cent of the resource super profits.

I'm wondering why this topic is still here. It's a blatantly political thread in teh wrong section wiht a blatantly misleading thread title.
I hate to seem like the thread police, but c'mon, if ya want to talk politics, be honest and put it in the right place.

Gestalt said...

but it's a response to an article about a windsurfers view on politics and includes a big picture of a windsurfer.

I didn't follow the link, as the responses were all about the resource tax.

It's still politics and still in the wrong place.
I avoid poitical or other ideological discussion on the interwebz, for good reason.

I hate this thread

I find discussion on the subject healthy... It is a very confusing proposition and both sides of the debate are exaggerating (or under stating) the impact.

There are many different opinions in this thread. There is no name calling, there are no insults, no hostility or bad blood. Just discussion and Q and A... Indeed there is very little said about either side of politics, just the tax (maybe I wrote a few things about Kev sorry). I think it is healthy, friendly discussion...

The only person who controls what you read (or write) on the internet is you...

Pugwash said
Irony? The most support for the tax seems to be coming from Victoria and NSW. Traditionally anti-mining states.
Have you been around Singleton and Muswellbrook lately? I think there are 25 open cut mines..the place looks like a lunar landscape..check out google earth ( I havent been game too depressing)..We have the worst air quality in the state..no wonder there is a lot of anti mine opinion..+ the $ doesn't adequately go back to the people affected. PS - Thats not even taking into account the fact that they are going to undermine us ( the Chinese..it all goes o/seas) with 3m subsidnece & 9" tilt on the house..Ive already had a neighbour have to go as her house is so badly damaged it has to be demolished..+ we could end up losing our dams and creeks into the underground mine..

KenHo said...

Gestalt said...

but it's a response to an article about a windsurfers view on politics and includes a big picture of a windsurfer.

I didn't follow the link, as the responses were all about the resource tax.

It's still politics and still in the wrong place.
I avoid poitical or other ideological discussion on the interwebz, for good reason.

if u dont like it dont read anny of it . dont ruit it for anny one else

My bad... there may be some direct cash payment for exploration from the government... This applies to companies that have income less than deductible expenditure (including exploration expenditure). In this case, the government will allow payable tax to fall below zero (it is a "refundable tax offset").

Exploration expenditure is deductible, then can be rebated at the company tax rate... It becomes a cash payment (tax return), when income is less than expenditure + rebate.

Basically, if you spend $10 mill on exploration and earn $20 million from existing assets/royalties, you can deduct the $10 mill + $2.8 mill (28% company tax) and pay 40% tax on $7.2 mill.

If you spend $10 mill on exploration and earn $12 million from existing assets/royalties, deductions are still the $12.8 mill, the government pays you a tax return of $800K.

Having lived in a town that exist for exploration and mining for 30 years , I have noticed a few trends.
when companies have profits coming in, the shareholders are making some money, THEN they will put money into exploration, when profits start going down exploration is the first to suffer,, which results in a slow down in discoveries and development, and it all goes quiet in the bush.
that causes a scarcity of minerals, price goes up, profits start to climb........
Strangely the companies dont seem to want the industry stable and steady, as the industry fluctuates, companies get stripped of assets, bought , sold , etc , .
The players, like those who seem to making all the noise in the media at the moment will be looking around at all the little profits to be made.
one thing that is consistent in all this is that the workers are always at the bottom of the list when the deals are getting done.
When I see Hugh Morgan , or Twiggy on the TV , I just know they will be making even more money , whichever way it all goes