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Australia Mining Report Q2 2010
Market |
Agriculture, Farming & Raw Materials |
Report Type |
Market Research |
Country |
Australia |
Published |
10 March 2010 |
Number of Pages |
60 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
Rumoured tax changes spook mining industry In January 2010, there was a report in the Sydney Morning Herald newspaper which claimed that there could soon be major changes to the taxes currently levied on the mining sector. The newspaper stated that a wide-ranging review of taxation carried out for the government by the secretary to the treasury, Ken Henry, has apparently recommended that the current system of state-based royalty taxes be scrapped and replaced with a uniform national resource rent tax, to be levied at 40%. This tax would not be levied until all the exploration and development costs of a project had been paid and would only be levied in years when the project generated a profit. As yet, the full tax review has not been made available to the public, although Prime Minister Rudd has said that it should be released before the budget in May 2010. Initial reaction to this proposal from the mining sector has been hostile, with the Association of Mining and Exploration Companies stating that ongoing speculation on tax changes is damaging to the mining industry. In addition, the key mining states of Western Australia and Queensland have attacked the proposals, as they remain heavily reliant on the current royalty system as a source of revenue. However, Newcrest CEO Ian Smith, who is also the current chairman of the Minerals Council of Australia, has been quoted in the media that there was no certainty than any of these proposed tax changes will ever make the statute book. Certainly, we feel that it is highly unlikely that Canberra would look to make wholesale changes to the taxation system for mining companies without first engaging the industry in dialogue. China’s acquisitive streak continues
Early 2010 has seen a continuation of moves by China to acquire stakes in Australian mining assets. In January 2010, it was reported that Zijin Mining had been successful in its AUD547mn bid for Indophil Resources. This follows several high-profile purchases of Australian mining assets over the course of 2009, including China Minmetals’ US$1.69bn takeover of OZ Minerals and Yanzhou Coal’s US$3bn takeover of Felix Resources. Indeed, already in 2010, Yanzhou has stated that it is looking for more acquisitions in the year to come. We expect China to maintain strong levels of investment into the Australian mining sector during 2010.
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