Resource super profit tax - Australian miners unhappy

Tuesday, 20 Mar 2012

The Association of Mining and Exploration Companies, which represents small and mid tier miners, condemned the tax.

Association chief executive Mr Simon Bennison said “The tax is simply unfair to smaller emerging miners, and is so complex that the administrative and compliance burden on industry and government will be extreme. “The introduction of this anti-competitive legislation in Australia will only further push investment capital offshore, and change our reputation as a safe place in which to invest.”

Source - Reuters

Iron ore price fall raises doubts on Australia mine tax plan

Friday, 06 Jan 2012

Reuters reported that Australia politically charged mining profits tax could raise less of the initial AUD 11 billion Prime Minister Ms Julia Gillard is promising if iron ore prices return to November levels accountants BDO warned in a senate submission.

BDO said If iron ore experiences a double dip drop prices could fall to a point where no one will pay MRRT. It SAID between USD 120 and USD 125 a tonne for ore, it was difficult to envisage established mining companies paying any tax, given large deductions afforded to them under the plan.

BDO said "We respectfully request treasury advice what MRRT tax will be collected if iron ore prices remain at USD 120 for an extended period of time."

Mega miners Xstrata, BHP Billiton and Rio Tinto last year agreed with Ms Gillard to pay the Minerals Resource Rent Tax only if the tax was cut to 30% from 40% and limited to profits from iron ore and coal mining.

(Sourced from Reuters)

Iron ore fall raises doubts on Australia mine tax plan

Wed Jan 4, 2012

SYDNEY, (Reuters) - Australia's politically charged mining profits tax could raise less of the initial A$11 billion Prime Minister Julia Gillard is promising if iron ore prices return to November levels, accountants BDO warned in a senate submission.

Mega-miners Xstrata, BHP Billiton and Rio Tinto , last year agreed with Gillard to pay the Minerals Resource Rent Tax only if the tax was cut to 30 percent from 40 percent and limited to profits from iron ore and coal mining.An earlier version was deemed unworkable within the ruling Labor Party and led to the removal of Australia's first Labor leader in 11 years, Kevin Rudd.

Analysts are divided on the direction of iron ore prices, which this year dropped as low as $116 a tonne and ranged from $119 to $147 a tonne over November.On Wednesday, the price stood at $138.30 a tonne.

Steel industries in most countries requiring ore are suffering, leaving China and other robust Asian economies with healthier balance sheets the key buyers.If iron ore experiences a "double dip drop" prices could fall to a point "where no one will pay MRRT", BDO said.

Between $120 and $125 a tonne for ore, it was "difficult to envisage" established mining companies paying any tax, given large deductions afforded to them under the plan, BDO said."We respectfully request treasury advise what MRRT tax will be collected if iron ore prices remain at $120 for an extended period of time," BDO said in its submission.

TAX BEING CLOSELY WATCHED

Gillard wants to use the tax to boost payments into worker pension funds and to spread the benefits of Australia's resources boom to other parts of the economy.The tax is being closely watched by other resource nations.Huge expansion plans underway by big mining houses promise to deliver hundreds of millions more tonnes of iron ore to the global supply pool.

At the same time, there are some signs China's steel production is waning after years of near-uninterrupted growth.China's daily crude steel output fell to 1.666 million tonnes in the second 10 days of December, down 0.44 percent from the preceding 10 days, data from the China Iron & Steel Association showed.

JULY 1 START

For the first half of 2012 -- the tax starts on July 1, 2012 -- seasonally weaker seaborne iron ore supply and some recovery in steel production should keep iron ore prices in a $130-$150 range according to CLSA analysts. By 2014, the price could be as low as $100 a tonne, CLSA forecasts.

Supporters of the tax have accused detractors of waging a scare campaign by saying Australia, whose economy relies heavily on mining, would see less investment in mining if the tax was introduced.

Mining is the lifeblood of the Australian economy and iron ore and coal generate the lion's share of national overseas earnings.But to date, even detractors concede that there's been little sign Australia was losing its appeal as a mining centre.

Rio Tinto is accelerating a plan to lift output by 50 percent to 333 million tonnes a year by 2015. BHP is aiming for a 37 percent rise in production to 220 million tonnes by around the same time.Gillard's supporters estimate Xstrata, BHP and Rio Tinto would shoulder 80 percent of the $11.1 billion in added tax revenue collected in the first three years.

(sourced Reuters)

Australian govt wins crucial support for mining tax

Mon Nov 21, 2011

CANBERRA (Reuters) - Australia's government is set to pass laws for its 30 percent mining profits tax later this week after agreeing to lift the starting threshold and promising more scrutiny of coal seam gas projects in a deal to win support from three key independents.

But the changes, which will cost about A$20 million a year in lost government revenue, have upset the Greens, whose support is needed to pass the laws, and done little to allay concerns of small and mid-tier mining companies.

Under the agreement with independent lawmaker Andrew Wilkie, the government will lift the starting profits threshold for the tax from A$50 million to A$75 million, although smaller iron ore miner BC Iron said the changes would give no relief to smaller companies.

"It's like painting that house full of termites" BC Iron Chief Executive Mike Young said. "To put A$75 million into context, at current iron prices, that's our margin on maybe 1.2 million tonnes."

Gillard's government, which holds a one-seat majority with support from one Green and the three independent lawmakers, wants the mining tax passed by the lower House of Representatives by the end of the week.

The government wants the tax on iron ore and coal mine profits, due to start in July 2012, to raise about A$7.7 billion in its first two years, and Treasurer Wayne Swan said the changes meant the biggest miners would pay the most.

"Most of this money will now be paid by the largest miners in this country," Swan told parliament.

A government deal with two other independents, Tony Windsor and Rob Oakeshott, earmarks A$200 million over five years for scientific research into coal seam gas projects, to allow governments to better assess the impact on water and farming.

GREENS WARY

The government wants to slap the proposed tax on big iron ore and coal miners as part of reforms designed to balance its budget and reallocate wealth from the mining industry, now enjoying the biggest boom in a century, to other sectors.

The government and global miners BHP Billiton, Rio Tinto and Xstrata agreed on the mining tax in 2010, but smaller miners such as Australia's Fortescue Metals Group have complained that the tax favors big miners.

But Simon Bennison, chief executive of the Association of Mining and Exploration Companies, said his group will continue to push for the tax to be based on a production threshold instead of a profit threshold.

Bennison said 10 million tonnes per year would be a good starting point.

"Iron ore prices are not going to stay at high levels forever, they have already fallen quite a lot and the profitability levels of companies are all different," he said.

The mining tax will help the government return the budget to surplus and fund a 1 percentage point cut in the company tax rate to 29 percent, portrayed as a boost for non-mining sectors, especially those hit hard by a strong local currency.

But the Greens, who want the tax rate to be lifted to 40 percent and for the tax to also apply to uranium and gold mines, said they now wanted to be sure the government did not cut other areas of the budget to fund Wilkie's amendments.

"We are going to ensure that the public interest be upheld here. We will be talking to the government in the coming day or two," Greens leader Bob Brown told reporters.

The government needs the Greens to pass the mining tax through parliament's Senate upper house, where a vote is due in early 2012.

(sourced Reuters)

Paul Howes declares war on Rio Tinto

Ewin Hannan, Industrial editor From: The Australian

February 16, 2011 12:00AM
PROMINENT union leader Paul Howes has reopened a bitter feud with mining giant Rio Tinto, launching a tirade against the company's management and declaring a major push to increase union membership across the resources sector.
Mr Howes, the national secretary of the Australian Workers Union, claimed "monkeys could do a better job" of managing Rio, accusing the company's chief executive, Tom Albanese, of "sucking out the blood, sweat and tears of blue-collar workers".

"I have got a message for Rio Tinto," he told delegates attending the union's national conference at the Gold Coast. "You don't own this government; you don't own this country anymore. Your workforce has the right to be represented. You cannot hide behind the law.
"You cannot hide behind your slimy, grubby mates in the Coalition because we're coming after you. We are going to take Rio Tinto on, and we are going to make sure that they pay a liveable wage to the workers who make the wealth that these shiny arses sitting in the boardroom in London enjoy."
Delegates yesterday endorsed plans to try to unionise every section of the aluminium and glass industries, with Mr Howes identifying Rio operations in Launceston and Gladstone as targets.
He also nominated BHP Billiton's Worsley Alumina refinery and its Olympic Dam project.
Mr Howes's attack on Rio follows last year's anti-mining tax campaign waged by Rio, BHP and Xstrata against Wayne Swan, a factional ally of Mr Howes, and former prime minister Kevin Rudd.
Mr Howes and the AWU were strong backers of Mr Rudd and Mr Swan's 40 per cent super-profits tax, which cost Mr Rudd his prime ministership and was overhauled by Julia Gillard.
The Treasurer earlier gave a speech to the conference paying homage to the AWU, the nation's oldest union. He left before Mr Howes delivered his broadside.
Mr Howes's comments, which company sources said took them by surprise, evoked the hard-fought industrial conflicts of the 1990s, when Rio and the mining unions fought for control over workplaces.
Rio was the first major mining company to place its workforce on individual contracts and refuse to deal with unions. The company believes this resulted in 15 years of industrial harmony at its Pilbara sites. Rio's animosity towards the unions was fuelled by one of the most infamous disputes in Australian industrial history, in which workers at the Robe River iron ore site went on strike in the mid-1980s because some flavours of ice-cream were not available in the canteen.
Mr Howes later denied he was engaging in class rhetoric. "I don't like Tom Albanese," he said. "I don't think I've ever hidden my lack of respect for Rio Tinto. They are a company who, frankly, monkeys could do a better job of running," Mr Howes said.
"They managed to completely stuff the acquisition of Alcan, destroyed their credibility with the ridiculous Chinalco deal; they have had turnaround on their board which would rival the Melbourne Storm.
"You have had them crying poor when it came to the RSPT, but yet a couple of weeks later post a $14 billion profit.
"I am happy for Rio Tinto to make $14bn. I don't believe in class war but I do believe that Rio Tinto has been waging a class war for a long time."
A Rio spokesman said the company "recognises every employee's right to choose to join a union or not join a union".
"We do not monitor the level of union membership in our businesses," he said.
He added that employment arrangements across the business included a mixture of collective employment agreements and individual agreements.

The Australian Mines and Metals Association accused Mr Howes of engaging in "tired old rhetoric" and predicted the union tactics would be unsuccessful.
"For 20 years, Howes and Bill Shorten and others have stood on the stump and said they are going to re-unionise the hard-rock mining industry and they have been a spectacular failure," the association's chief executive, Steve Knott, said.
He said unions had failed to lift membership because employees were highly paid and had high safety standards in their workplace: "Employers have worked hard to ensure employees are safe at work and well remunerated."
Mr Howes said the AWU was the nation's fastest-growing union, having recruited an extra 30,000 members over the past three years. (Additional reporting: Matt Chambers, sourced:The Australian)
Tags:Paul Howes, declares war on Rio Tinto, union leader, anti-mining tax, super-profit tax, AWU, workforce, union membership, employment agreement