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I cant help but wonder what the union faithful are thinking now that the Labor government has bent them over and ****** them yet again
I guess it'll be forgotten by the next election though!
Oh how I wait for the first of the dickhead miners up here to start whinging about it.....
Simple, a lot of smaller coal companies & even some of the big ones are now starting to go off shore. No coal mines, no work for smaller companies...... starting to see the problem ;)Quote:
Originally Posted by clean32
I am afraid Diana, that like the federal government, you do not know how mining works.
Exploration staff propose a project, based on available knowledge. Before this project proceeds to the next stage, estimates or calculations are made of the costs and the income expected. This "profit" is then discounted to account for the time expected between the expenditure and the profit (this discounting is very sensitive to predicted interest rates!) and then (this is the important part) factored for the risk in the project.
This procedure is repeated at each stage - acquiring exploration acreage, planning an exploration project, detailed drilling of a prospect, initial development, mine expansion.
Now because exploration is not an exact science, and because miners have no control over product prices, and other factors, only some of the projects will make the estimated profit (this is the risk factor). Others will lose money, in some cases, a lot (see for example the BHP WA nickel project). It is necessary for the successful ones to be very successful to make up for the ones that fail. (Taking the mining industry as a whole, it is not a high profit industry - a bit like many other activities - you only notice the successful ones!)
The government is now proposing to take a large proportion of this "super profit". This raises the bar for projects to proceed even from the very first step. Only projects which are calculated to be "super super profitable" (before tax) can now proceed to even the first step. Actually it is even worse than that. One of the risks taken into account is what is referred to as "sovereign risk", the risk that the government will change the rules. Australia has for many years been rated as having very low sovereign risk - it has just got a lot higher, and will remain high even if the government were to back down (this time!).
The inevitable result will be a reduction in exploration, development and expansion of mining in Australia, similar to that seen in offshore petroleum with the introduction of the offshore resource rent tax. Only the lowest risk and quickest return projects will proceed. How big is the reduction will depend on the details of the legislation. There is a few years before the tax comes in, but it should be noted that some mining projects may be twenty years between initial expenditure and first profit.
As a final comment, it should be noted that the biggest payer of company tax in Australia is BHP. Unlike many manufacturers and particularly service companies, mining companies rarely are able to use transfer pricing to avoid tax (saw a few days ago that Google Australia manages to pay company tax in Ireland at a much lower rate than here!)
John
IMHO this will be one of the biggest mistakes of our time. When the crash hit our banks were insolvent. They were unable to rollover their funding. Aussie banks get nearly half of their funds from OS. This debt is relatively short term, which means it is constantly being rolled over.Quote:
Originally Posted by Disco44
So, after a few phone calls the government guaranteed our banks. This enabled them to get capital and go on one of the biggest lending sprees in our history (I suspect it was an unofficial condition) encouraging poor saps into property to stabilise the housing and construction markets.
Thing is, as credit markets stabilised the banks didn't need the guarantee they just took it off the table and said "if you need it again it's there" - nudge nudge, wink wink. So, the banks now know they can't get into trouble so they are having a good old time doing whatever makes them profits and their CEO's bonuses.
They haven't built up their reserves or addressed their funding issues in any meaningful sense. So, should there be another seizure of the credit markets, or a deterioration in the property market {gasp} then the tax payer will be on the hook. Given we have over one trillion in mortgage debt alone it wouldn't take much for our government to be saddled with substantial debt. Yet this is not mentioned.
Oh yeah, the mining tax is a real stupid idea too. Endless growth in China is just taken as a given. Already there are signs that their crash is a happening. I see our mining and banking industries as increasingly vulnerable. In short, those are some dark clouds forming...
john
bearing in mind i have no idea of how this all works..
the tax is only part of a bigger package they are saying.
how come many are saying this could be a good thing for the smaller players and could lead to a lot more exploration because of the incentives?
As I said, the overall effect depends on the details. The exploration incentives are a way of reducing the overall effect, and will favour the smaller companies which have no current income to pay for their exploration. But with mining the big expenditure comes with development, not exploration, and the risks do not go away, just a bit less. If the package was tax neutral, which it will not be, it would simply put new or unsuccessful miners on the same level as the successful ones. Perhaps this is not such a good idea, as the successful ones are more likely to be the ones who operate more effectively.Quote:
Originally Posted by incisor
Put simply, if you take money out of the industry, the industry will have less to spend, and will spend it where they have at least a chance to make up for the failures. And, without having access to the figures, I would think that over the longer term the vast majority of exploration expenditure in Australia has come directly from mining profits, and most of the rest from capital subscribed in the hope of "super profits". Without the possibility of "super profits" nobody is going to put up capital in anything as risky as exploration. Let's face it, most exploration is non-productive. A government subsidy will help the smaller players, but not when they need to raise more capital or (as they usually do) want to farm out a project to a large company with the money (from "super profits") to develop it.
John
and the ressources are finite - once they are gone they are gone and so will the miners and the jobs. All the profits will be overseas because the companies are owned o/s e.g. China.
Can't see any issue in bringing it into line with the petroleum extraction part of the rersources sector.
I guess that this fellow know a bit more than many of us about mining and profits :)
'Hysterical' mining industry claims 'complete rot'
In the way that I see is: how many people will be affected by the 40% tax and how many millons in generations to come wiil be better of in the future with the superanuation.
"Think today to be able to live tomorrow"
Whay I do not like about mining in the present form is that they milk dry Australian assets and then they take off and live the future generations with a big hole in the ground....nothing more. :(
Stop selling the raw material and export value added good.
Thanks for that answer Capt. but are not you and I saying the same thing?Quote:
Originally Posted by Captain_Rightfoot
I understand that the Feds propped them up with sureties but IMHO because they are self regulated they just laughed at the Feds and bored straight back into their customers with what is now the worlds highest charges.My point of re-regularization ( and that is different to nationalization which I do not agree with) should bring them back to reality.
Completely wrong on all counts.Quote:
Originally Posted by JLo
1. Resources are finite - but not in practical terms. Mining has been the backbone of Australia for 150 years and will continue to be into the future, for hundreds if not thousands of years. As resources become scarcer, mining of lower grade, deeper and smaller resources will become feasible, as will exploration for these. The number of jobs will increase, not decrease.
2. The miners are not owned overseas - the biggest miner, BHP, is 60% Australian owned and is the largest Australian taxpayer already. Most other miners are at least partly Australian owned, and even if 100% overseas owned, most of the income from sales of product is expended in Australia, profit being only a small proportion of income.
3. Resource rent tax only applies in the offshore petroleum industry. Apart from any other considerations, this new tax is a major grab onto state and territory tax areas, softened by allowing royalties as a deduction.
4. The major fault with the tax is that it ignores the concept of risk, central to the mining industry, and as a result will greatly reduce the future level of mining activity in Australia. Canadian government spokesmen are already crowing over the advantage this will give Canada, but the same applies to other major mineral producing countries such as Brazil, South Africa and Chile.
John