Steve Dii
JF-Expert Member
- Jun 25, 2007
- 6,402
- 1,254
SYDNEY (MarketWatch) -- The government's revised Minerals Resource Rent Tax released Friday greatly reduces the number of mining companies affected by the new tax compared with that of the original proposal.
The plan will apply only to iron ore and coal and be applied at a rate of 30%, as opposed to 40% under the original proposal, while the existing offshore petroleum resource rent tax will be extended to onshore companies.
The exclusion of commodities other than iron ore, coal, and onshore oil and gas means the number of affected companies will be cut to around 320 from 2,500, the government said.
Some of Australia's biggest listed domestic miners, including Newcrest Mining Ltd. (NCM.AU), Alumina Ltd. (AWC.AU) OZ Minerals Ltd. (OZL.AU), Lihir Gold Ltd. (LGL.AU), and Iluka Resources Ltd. (ILU.AU), would be largely unaffected thanks to their concentration on other commodities.
The plan also introduces a threshold of A$50 million annual resource profits before miners incur a tax under the iron ore and coal regime.
Among Australia's listed iron ore and coal miners, only BHP Billiton Ltd. (BHP 62.42, +0.43, +0.69%) , Rio Tinto Ltd. (RTP 44.26, +0.66, +1.51%) , Fortescue Metals Group Ltd. (FMG.AU), Macarthur Coal Ltd. (MCC.AU), Mount Gibson Iron Ltd. (MGX.AU), Centennial Coal Co. Ltd. (CEY.AU), Whitehaven Coal Ltd. (WHC.AU), Grange Resources Ltd. (GRR.AU), and New Hope Corp. (NHC.AU) have breached that level of operating profits since 2005.
Several offshore miners, such as Xstrata PLC (XTA.LN) and Anglo American PLC (AAL.LN), will likely be included in regime.
Among other companies listed in Australia, OneSteel Ltd. (OST.AU) also recorded A$161.9 million in operating profits from iron ore mining in 2009, and Wesfarmers Ltd. (WES.AU) made A$915 million in coal mining profits in the same year.
"It's a long way improved from the original resource super profits tax," said David George, a mining analyst at JPMorgan in Sydney.
Analysis by JPMorgan prepared before the new tax proposal and based on a 5% uplift rate and 28% corporate tax rate, rather than the 7% uplift and 29% rate under Friday's proposal, posits a target price of A$38.80 for BHP Billiton, A$92.53 for Rio Tinto, A$4.01 for Fortescue, and A$5 for Centennial.
That compares to share prices at 0140 GMT of A$37.38, A$65.84, A$4.12 and A$4.49.
George said the target prices would, if anything, probably be increased by the latest changes in the tax proposal.
Source: MarketWatch - Stock Market Quotes, Business News, Financial News
The Australian government has reached a deal with mining companies over controversial tax plans.
Former Prime Minister Kevin Rudd had announced plans for a 40% tax on miners' profits.
But a compromise agreement negotiated by his successor, Julia Gillard, has now reduced the rate to 30% for coal and iron ore miners.
But petroleum and gas operations will still pay a pre-existing 40% tax rate, the government said.
However that will now cover onshore oil and gas projects as well as the offshore operations previously subject to it.
Smaller iron ore and coal companies, with annual profits below A$50m (£28m; $42m), will not be required to pay the new tax.
The plans are still expected to raise billions of dollars for the government, however.
When Mr Rudd announced the tax plans earlier this year, he said he expected to raise A$9bn a year.
The revised plan would raise A$1.5bn less, the government said, but cuts to company tax rates that were to be paid for by the mining tax will still go ahead.
The BBC's Nick Bryant in Sydney says the deal brings to an end one of the most angry battles between the government and corporate sector that Australia has seen.
The row played out on prime time television with confrontational advertisements from both sides, and played a key part in the demise of Mr Rudd, our correspondent says.
In a country often called the "quarry of the world", many Australians believe their personal prosperity is inextricably linked with the fortunes of the mining giants, he adds.
Companies including BHP Billiton and Rio Tinto had launched an aggressive lobbying campaign against Mr Rudd's tax plan, warning that it could harm economic growth.
But industry executives welcomed the fresh deal, calling it "a positive outcome".
Ms Gillard said the "breakthrough agreement" would "deliver a better return for the Australian people for the resources they own and which can only be dug up once".
Many political observers suggest that, having stuck a deal, Ms Gillard's Labor Party - which has already seen a surge in the polls following her becoming leader last week - may call an election imminently to capitalise on its popularity.
Opposition parties have vowed to oppose the tax and scrap it if they win office.
Source: BBC
-----------------------------------------
In case you have wondered, Barrick Gold with highly vested interest in Tanzania paying a meagre 3% to the government coffers also operates in Australia and is affected by above announced tax regime.
Link: Barrick Gold Corporation - Australia-Pacific gold mines in Western Australia, Queensland, New South Wales and Papua New Guinea
The plan will apply only to iron ore and coal and be applied at a rate of 30%, as opposed to 40% under the original proposal, while the existing offshore petroleum resource rent tax will be extended to onshore companies.
The exclusion of commodities other than iron ore, coal, and onshore oil and gas means the number of affected companies will be cut to around 320 from 2,500, the government said.
Some of Australia's biggest listed domestic miners, including Newcrest Mining Ltd. (NCM.AU), Alumina Ltd. (AWC.AU) OZ Minerals Ltd. (OZL.AU), Lihir Gold Ltd. (LGL.AU), and Iluka Resources Ltd. (ILU.AU), would be largely unaffected thanks to their concentration on other commodities.
The plan also introduces a threshold of A$50 million annual resource profits before miners incur a tax under the iron ore and coal regime.
Among Australia's listed iron ore and coal miners, only BHP Billiton Ltd. (BHP 62.42, +0.43, +0.69%) , Rio Tinto Ltd. (RTP 44.26, +0.66, +1.51%) , Fortescue Metals Group Ltd. (FMG.AU), Macarthur Coal Ltd. (MCC.AU), Mount Gibson Iron Ltd. (MGX.AU), Centennial Coal Co. Ltd. (CEY.AU), Whitehaven Coal Ltd. (WHC.AU), Grange Resources Ltd. (GRR.AU), and New Hope Corp. (NHC.AU) have breached that level of operating profits since 2005.
Several offshore miners, such as Xstrata PLC (XTA.LN) and Anglo American PLC (AAL.LN), will likely be included in regime.
Among other companies listed in Australia, OneSteel Ltd. (OST.AU) also recorded A$161.9 million in operating profits from iron ore mining in 2009, and Wesfarmers Ltd. (WES.AU) made A$915 million in coal mining profits in the same year.
"It's a long way improved from the original resource super profits tax," said David George, a mining analyst at JPMorgan in Sydney.
Analysis by JPMorgan prepared before the new tax proposal and based on a 5% uplift rate and 28% corporate tax rate, rather than the 7% uplift and 29% rate under Friday's proposal, posits a target price of A$38.80 for BHP Billiton, A$92.53 for Rio Tinto, A$4.01 for Fortescue, and A$5 for Centennial.
That compares to share prices at 0140 GMT of A$37.38, A$65.84, A$4.12 and A$4.49.
George said the target prices would, if anything, probably be increased by the latest changes in the tax proposal.
Source: MarketWatch - Stock Market Quotes, Business News, Financial News
The Australian government has reached a deal with mining companies over controversial tax plans.
Former Prime Minister Kevin Rudd had announced plans for a 40% tax on miners' profits.
But a compromise agreement negotiated by his successor, Julia Gillard, has now reduced the rate to 30% for coal and iron ore miners.
But petroleum and gas operations will still pay a pre-existing 40% tax rate, the government said.
However that will now cover onshore oil and gas projects as well as the offshore operations previously subject to it.
Smaller iron ore and coal companies, with annual profits below A$50m (£28m; $42m), will not be required to pay the new tax.
The plans are still expected to raise billions of dollars for the government, however.
When Mr Rudd announced the tax plans earlier this year, he said he expected to raise A$9bn a year.
The revised plan would raise A$1.5bn less, the government said, but cuts to company tax rates that were to be paid for by the mining tax will still go ahead.
The BBC's Nick Bryant in Sydney says the deal brings to an end one of the most angry battles between the government and corporate sector that Australia has seen.
The row played out on prime time television with confrontational advertisements from both sides, and played a key part in the demise of Mr Rudd, our correspondent says.
In a country often called the "quarry of the world", many Australians believe their personal prosperity is inextricably linked with the fortunes of the mining giants, he adds.
Companies including BHP Billiton and Rio Tinto had launched an aggressive lobbying campaign against Mr Rudd's tax plan, warning that it could harm economic growth.
But industry executives welcomed the fresh deal, calling it "a positive outcome".
Ms Gillard said the "breakthrough agreement" would "deliver a better return for the Australian people for the resources they own and which can only be dug up once".
Many political observers suggest that, having stuck a deal, Ms Gillard's Labor Party - which has already seen a surge in the polls following her becoming leader last week - may call an election imminently to capitalise on its popularity.
Opposition parties have vowed to oppose the tax and scrap it if they win office.
Source: BBC
-----------------------------------------
In case you have wondered, Barrick Gold with highly vested interest in Tanzania paying a meagre 3% to the government coffers also operates in Australia and is affected by above announced tax regime.
Link: Barrick Gold Corporation - Australia-Pacific gold mines in Western Australia, Queensland, New South Wales and Papua New Guinea