25-May-10 by Emily Morgan and AAP
Minara Resources and Gindalbie Metals today joined the growing list of
miners, including FMG and Rio Tinto, speaking out over the turmoil created
by the RSPT proposal.
Small and large miners alike has expressed concern that the proposed
Resources Super Profits Tax will affect their future projects as well as the
competitveness of the Australian mining industry.
Rio Tinto weighed in this morning, making comment that the federal
government's proposed resources super profits tax has already damaged
Australia's reputation as an investment destination.
Iron ore miner Fortescue Metals Group became vocal again today, saying its
share price may fall due to the federal government's proposed RSPT and
describes the proposed tax as "socialist style funding".
Fortescue shares have already lost ground since the RSPT was revealed as
part of the Henry Review on May 2.
Smaller WA miners Windimurra Vanadium and Atlantic have claimed the RSPT
will not affect the success of their current projects, while Gindalbie has
said it supports reform to the current mining tax system but hopes the new
system will only apply to future projects.
"Gindalbie supports well thought out reform to our tax system. As a
principle, however, any reform proposal should apply only to new
investments, not to existing projects or projects such as Karara which are
under construction and were committed to under the expectations of the
existing system."
Minara said it will look offshore to more desirable tax jurisdictions while
the RSPT continues to threaten miner's earnings; under the RSPT rate, Minara
said it would be taxed at an even higher rate than BHP Billiton.
BHP entered the RSPT ring yesterday, albeit fighting a different battle.
The company denied federal government accusations that multinational miners
paid as little as 13 per cent tax, releasing figures which showed its
effective tax rate was 43 per cent.
Meanwhile, Minara chief executive Peter Johnstone said the company would
continue to seek to diversify from nickel laterites into nickel sulphides
and other base metals, however it will focus on favourable tax environments
such as Canada.
"Under the new proposed tax, if the rules come in, it would be much more
favourable to look at investments offshore," Mr Johnstone told AAP.
"In the world of nickel, there's no shortage of resources, particularly
laterites ... in Indonesia, The Philippines, New Caledonia, Brazil and
Canada.
Mr Johnstone's comments follow statements earlier this month by Canadian MP
Brad Trost, who said the Rudd government's planned RSPT would give a huge
competitive advantage to the mining-savvy North American nation, where
corporate tax rates are being reduced.
"We will be the highest taxed (mining sector) in the world," Mr Johnstone
said.
"We've given our competitors a free hit."
Mr Johnstone said Minara had been on the hunt for attractive acquisitions
for 12 months but would continue to be patient for the right opportunity.
Funding would be more readily available for overseas projects, he said.
Mr Johnstone also said Minara expected to pay a total tax rate of 58 per
cent if the RSPT goes through, eclipsing BHP Billiton's predicted 57 per
cent tax bill, which has been disputed by the federal government as being
much lower.
He said the commonwealth was simply ignoring other non-RSPT taxes that BHP
Billiton had factored in such as payroll tax.
"We think BHP's numbers are dead right," he said.
"Our tax will be about 58 per cent and at some point in time, depending on
which royalty regime we're operating under, could go above 60 per cent.
Mr Johnstone echoed criticism from Fortescue Metals Group Ltd chairman Herb
Elliott on Tuesday for the RSPT's big carrot to the mining sector - a 40 per
cent rebate on losses.
Such a rebate would reward companies for pursuing marginal projects, Mr
Johnstone said.
"I think it is absurd the government is going to try to pick up 40 per cent
of the risks."
Mr Johnstone said the rebate would have seen BHP Billiton receive $A1.2
billion for last year mothballing its $US2.1 billion ($A2.56 billion)
Ravensthorpe nickel laterite mine in Western Australia, which was sold to a
Canadian copper miner early this year.
"Can anybody imagine that happening? I personally couldn't.
"It is just bad policy. Nobody wants the government to become a partner in
second class developments."
He said Minara, along with the rest of the mining sector, was trying to
engage with the Rudd government about the tax.
It was unacceptable that talks thus far had been bound by non-negotiable
parameters, namely the threshold by which the tax kicks in and its 40 per
cent rate.
"Everything should be on the table," he said.
"It has to be overturned."
Shares in Minara declined 4.5 cents, or 6.34 per cent, to 66.5 cents by 1456
AEST.
ref
http://www.wabusinessnews.com.au/en-story/1/80713/Growing-RSPT-turmoil-miners-speak-out
