mining tax...

Arete

Likes Dirt
I think its shit. I've seen a lot of work stop because of the tax talk. The mining companies at the moment, are bluffing. However, if this tax goes through, they're going to try and recuperate the losses - this means less expansion, worse environmental policies, lower maintenance, lower safety, and lower pay for workers.
I've had a fair bit of recent contact with mines as an environmental advisor. The mines, as it stands do exactly what they HAVE to do with regards to Environment and Safety. The only thing that will change how the mines treat OH&S and EIS is changes to the legislation and rules.
As a consultant, the mines paid me what they had to pay me. I have been offered bullshit pay and I don't go. The only reason they need people like me on site is because, at least in my case I am signed off to use Nembutal and have field experience - quals that need significant training. So if they aren't prepared to train their own staff and they offer shit money, no one qualified will take it, they won't be able to do a fauna survey, won't fufil their EIS requirements and can't operate. Same with everyone down to the cook.

If politicians really want to help our infrastructure they should stop selling off our public assets instead of damaging our biggest industry.
I don't for an instant believe it's about helping anything other than the pollies themselves. It's a "get out of debt quick" tactic, and both major parties will be playing them, especially the one in power in 2011. Bragging rights for the best "fiscal management" and getting the balance back in the black is the aim of this tax. A large degree of the forseeable future election campaigning will centre around compensating for stimulus expenditure without increasing taxation on voters. Labour's obviously decided, probably correctly that a lot of its core voters won't mind if they take that money out of the profits of the big miners.
 

scblack

Leucocholic
I don't for an instant believe it's about helping anything other than the pollies themselves. It's a "get out of debt quick" tactic, and both major parties will be playing them, especially the one in power in 2011. Bragging rights for the best "fiscal management" and getting the balance back in the black is the aim of this tax. A large degree of the forseeable future election campaigning will centre around compensating for stimulus expenditure without increasing taxation on voters. Labour's obviously decided, probably correctly that a lot of its core voters won't mind if they take that money out of the profits of the big miners.
...probably correctly......???

Looking at poll results lately I make an argument you are wrong there. Seems everyone has the shits with Rudd.

Unfortunately he only has Abbott to content with........so I'd expect Labor to win next federal election, but with reduced majority.
 

thecat

NSWMTB, Central Tableland MBC
I don't for an instant believe it's about helping anything other than the pollies themselves. It's a "get out of debt quick" tactic, .
Anyone else get the feeling KRudd reeeeeally wanted to be seen as Robin Hood, taxing the rich and giving to the poor?
 

daever

lunatic rant extraordinaire
I've had a fair bit of recent contact with mines as an environmental advisor. The mines, as it stands do exactly what they HAVE to do with regards to Environment and Safety. The only thing that will change how the mines treat OH&S and EIS is changes to the legislation and rules.
I can guarantee you some of the practices I've seen would definitely go against any standards. If they can compromise environment and safety to save some money, they will. It's bullshit I know, because it all comes back on us.
..
 

dhr_matt

Likes Dirt
I work at the mines on contract through a partnering contracting company. Unfortunately my job is always at risk with gold prices and now crap like this that happens. A bit scary for me, but I have been told I "should" have at least another year of work there at the moment but cannot be guaranteed with everything going on. Fingers crossed...

I'm not for it, I see why they're doing it but it's not fair on the mining industry imo and jobs will be lost.
 

top_dog

Likes Dirt
As such, I don't consider it unreasonable for miners to compensate the general public in order to carry out said activites. As for the correct way for them to make these contributions - that's another kettle of Pisces altogether...
Mining companies already pay royalties on every tonne of ore hoisted to surface. Currently a metal mine in NSW is paying about 36% tax.

For example Newcrest's Cadia East will produce 24Mtpa @ 0.61g/t AU and 0.33% Cu for 14.6 Million grams of Gold and 79,200 tonnes of Copper. On spot values that is $576,084,000.00 and $523,512,000.00 for Au and Cu respectively. Sum and multiply by 0.04 (NSW royalty rate) to see that Newcrest will be paying just shy of $44 Million in royalties. Remember this is on top of the 30% company tax and is paid regardless of whether Newcrest makes a profit or a loss.

So mining companies already pay a significant premium to other companies in Australia and they share their wealth around significantly more than other big corporates.

Just this morning I saw a banner on this very website for an event sponsored by BHP Billiton. When was the last time you saw a MTB race supported by a bank?
 
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dhr_matt

Likes Dirt
Interesting you quote the figures of Cadia East! That is the project that funds my current contract.

You know your stuff mate!
 

Ivan

Eats Squid
For example Newcrest's Cadia East will produce 24Mtpa @ 0.61g/t AU and 0.33% Cu for 14.6 Million grams of Gold and 79,200 tonnes of Copper. On spot values that is $576,084,000.00 and $523,512,000.00 for Au and Cu respectively. Sum and multiply by 0.04 (NSW royalty rate) to see that Newcrest will be paying just shy of $44 Million in royalties. Remember this is on top of the 30% company tax and is paid regardless of whether Newcrest makes a profit or a loss.
?
So under the RSPT, the $44M in royalties would be refunded by the Fed Gov, Newcrest would continue to pay the 30% company tax, and then a further 40% on any profits over 6%, or any loss would be subsidised by 40% by the Fed Gov.

The tax isn't a bad idea, what is a bad idea is making it applicable to current projects, federalising a resource that belongs to the states, not convincing the states to drop the royalty payment scheme, and doing a shithouse job of implementing it.
 

pocket_cup

Likes Dirt
fence sitting.
what do you mean "fence sitting" waying up both sides of the arguement and asking for other people opinion is not fence sitting. just because im asking for people for their opinion. sometimes you should way up pros and cons before making a decision.
 

---Matt---

Likes Bikes and Dirt
So under the RSPT, the $44M in royalties would be refunded by the Fed Gov, Newcrest would continue to pay the 30% company tax, and then a further 40% on any profits over 6%, or any loss would be subsidised by 40% by the Fed Gov.

The tax isn't a bad idea, what is a bad idea is making it applicable to current projects, federalising a resource that belongs to the states, not convincing the states to drop the royalty payment scheme, and doing a shithouse job of implementing it.
Spot on! I work for a mining/manufacturing company and if what we're being told by head office is true, it will affect our business to the point of possibly shutting down some major parts of the company.

Personally, I'm not against the tax, as much as how they plan to implement it.
 

top_dog

Likes Dirt
So under the RSPT, the $44M in royalties would be refunded by the Fed Gov, Newcrest would continue to pay the 30% company tax, and then a further 40% on any profits over 6%, or any loss would be subsidised by 40% by the Fed Gov.

The tax isn't a bad idea, what is a bad idea is making it applicable to current projects, federalising a resource that belongs to the states, not convincing the states to drop the royalty payment scheme, and doing a shithouse job of implementing it.
Yes you're correct Ivan but the company tax rate would drop to 28% for all companies.

My bet is that exploration and what I call pumping up (feasibility studies etc) will become a good way to make money. That way you are not actually mining and paying stupidly high taxes. But who will buy the mines? Chinese interests, which Labour voters and unionists would love I'm sure.:rolleyes: Look at Cape Lambert and China Sci-Tech for example.
 

thecat

NSWMTB, Central Tableland MBC
Spot on! I work for a mining/manufacturing company and if what we're being told by head office is true, i
You can't have been working in the industry long if you believe what head office tells you...

When I started in the mines in 92 we were told that pit had a maximum of 6 years left. Every year we were told how it was no longer profitable and we have to increase production. At the time we were breaking production records left right and center.

In 97 25% of the workforce was retrenched because we were "producing too much"... Almost 1million ton was sitting in the stock pile waiting to be sold...

The pit is still going, producing more coal then ever and with a bigger workforce. I've been offered a job back there several times (seems like every other month now).... They are still being told the pit has only 3 years of life left....

I've worked at quiet a few mines and every single one head office will tell you how tight the operation is and how close they are to having to lay people off.

Mining has always been boom and bust and jobs have only ever been as secure as the current sales commitments but right now I'd say mining jobs are far more secure than they ever were through the 80s and 90s
 

MasterOfReality

After forever
This tax is shit, no ifs or buts. My tip is the government will compromise on the rate and when it kicks in (remember, Rudd reckons 'its about right').

Its a furphy how he keeps going on about how we own the minerals. Well its no bloody good to me when its sitting in the ground. Someone has got to dig it up.

If the government somehow compromises and make the whole unwieldy thing more streamlined, then it might be good.

It won't stop current operations, too much has been invested to stop, but it will certainly put the brakes on upcoming projects. Working on pre-feasibiity studies as a consultant, its easy too see the effect, something thats not visible to the general public.

Someone early on in this thread mentioned it - its a Robin Hood exercise, but has backfired badly on Rudd. People aren't as stupid as he thinks.

I'm onsite in the Pilbara at the moment, and it is the talking point up here. If Rudd and the ACTU thinks their comrades working onsite support this tax, they are deluded.

Another point to note is under the new tax, the government subsidises/refunds losses in case a project doesn't work out. I don't like that at all. I don't want my taxes exposed to risk like that, if I wanted to partake in that type of risk, I would buy mining shares, not having my taxes subsidising bad business decisions. I think it will breed complacency.

Why does Rudd keep calling it tax reform? It is nothing of the sort, its a tax grab plain and simple. No wonder the industry is jacking up, I don't blame them. Why not a 'super tax' on banks? They make money out of my money, and my money isn't an infinite resource either.
 

Middo

Likes Bikes
I just love how the mining companies keep sprouting the line that it will cost jobs. They are some of the worst offenders for laying people off, and they do it regularly. As soon as commodities prices drop, out come the hatchet men. My whole exploration department was axed in 2009, along with those of many other companies, and along with work conditions for other areas of the mine (no FIFO, subsidized housing etc). No ifs, no buts, just see you later, and for those that had their conditions cut, "if you don't like it, leave".

Now if the Govt has more tax dollars to fund other areas of society (you know, the thing we all live in) then so be it. Someone made a comment earlier about it going to "druggies & dole bludgers", but what about to the people like me who spent almost a year out of work when I was retrenched by those same mining companies who are now crying foul because their slice of pie is being made a bit smaller?

As I see it, it's a supply issue, and as long as there's a buck to be made, they'll find a way around it. If it's a demand issue (ie China et al) stops buying, then there's a problem.
 

scblack

Leucocholic
Another point to note is under the new tax, the government subsidises/refunds losses in case a project doesn't work out. I don't like that at all. I don't want my taxes exposed to risk like that, if I wanted to partake in that type of risk, I would buy mining shares, not having my taxes subsidising bad business decisions. I think it will breed complacency.
It is known as a "Brown Tax" if you want to look into the technicality of it further.:)

The Cat said:
......Mining has always been boom and bust.......
The fact mining is just that - boom and bust - is part of the reason this tax is such shit. Mining is booming at present - but how long is that going to last????

Once the boom finishes, tax revenue dries up, and then the taxpayer is funding the mining industry as MasterofReality has said. Dudd is simply taking a convenient tax grab to fill a budget hole. The boom does not last, then we the taxpayer are paying for mines losing money.
 

smeck

Likes Dirt
The tax isn't a bad idea, what is a bad idea is making it applicable to current projects, federalising a resource that belongs to the states, not convincing the states to drop the royalty payment scheme, and doing a shithouse job of implementing it.
Actually it's a horrific idea, there have been many attempts to justify it based on the situations in other countries and in other industries and just about every comparison is irrelevant. For starters the RSPT isn't a tax on Super Profits, it's a tax on profits over 6%, find me a company that thinks making a $6k profit from $100k turnover is super! Coal mines do get a lot of their infrastructure provided, Metaliferrous and Iron Ore mines often don't. We supply our own power, water, built our own airstrip and roads, we haul our concentrate to our own facility and then pay contract rates for it to be railed to our own port. Subsidised my arse, and considering QR is on the market where is the new money coming from. In the Pilbara ore mines BHP and Rio had to build everything from scratch. We lived in company towns and went to the company built school and played T-ball for about 6 different teams all sponsored by the company that incidently also supplied the oval. Then every few years 10km of rail line gets washed away by a cyclone and they rebuild it again, in the mean time the Government didn't fly the food in because we were cut off (no flood relief), the company did that too.

Royalties. They are not paid by the tonne. The fact that it is continually stated by Politicians and in the media just goes to prove this argument is being made by people who shouldn't be having the argument. Royalties in quarryies (etc) are per tonne, the mines Rudd is going after pay royalties Ad Valorem, they pay a percentage of what they earn. This is were the utter tripe of the 'everyone deserves a share' argument comes in. Currently every mine pays a percentage of its turnover in royalties, profitable or not, whatever it digs and sells the Government takes a cut.

Hence every mine pays for what it takes. The RSPT means only profitable mines pay, the small shows can just keep chipping away for free. Hence this isn't really about everyone getting a share of the resources we all own and sustainability and investment, it's about getting a bigger share of the money being made and to hell with anything else. It's the big operations that train most of the graduates, that trial new safety systems and gear while it is still ferociously expensive. We buy systems like collision avoidance to stop machines and people getting too close, trial it, get it to work, then the smaller shows come on when its affordable. It's the same with equipment, cheap second hand gear doesn't appear, someone buys it new and then sells it when they want something shinier and new.

If you take money from the big end of town you will kick the small end even harder. There are a few operations around today only because of the cash they made during the boom kept them afloat during the crisis. Plenty closed, but not as many as could have needed to. We are currently investing $100mil on extending mine life because as the mineral grade drops you need to process more ore to produce the same amount of concentrate. Profits fall because cost increases in expanding and running a bigger mine, yet sales will remain the same because the amount of final product doesn't change. With royalties the Governement gets it's cut because it's based on what we sell, with the RSPT the cut reduces every year because it's based on what we have left.

Our expansion is going ahead, though its only 4 years till the next cross road when Corporate run the next feasibility on us, Xstrata's Ernest Henry is not, that project was line ball, the Board didn't want it, local management did. In the end the local management won, until the RSPT moved the goal post. Paul Howes has been stating that another operator will come along and take it up, it represents a fundamental lack of knowledge as to how the industry works. You don't just start an old mine, you need to find something profitable and worth restarting it for to justify the huge cost of reopening old workings. A new operator won't be able to process enough ore without the rest of Xstrata's operation to be profitable, the only way it will reopen is on a small scale were they can cherry pick, but that won't create 300 jobs, that will create 50.

The industry will survive, it will not shrivel, we have some incredible ore depsoits here and something like 40% of the world's uranium. QLD can keep mining coal at its current rate for something like 400 years, WA has enough Iron Ore to keep going for another 200years. The problem is there are plenty of other countries in a similar boat. BHP are investing $5bill in Liberia, they have to build everything but they generally do anyway. A year ago it wouldn't have been worth the effort, now it is. Rudd uses the example the Sovereign Risk is when Rio Tinto had half the Simondou lease rescinded to award to a pet company of the Government. Yet our Government is retrospectively taking 57% of a companies profits, that is the sort of cost return that makes more marginal countries look worth the risk. The investors that pay for these operations might just stop putting money into BHP and Rio and start investing in Vale, Brazil has more Iron Ore than Australia and cheaper labour. They have to ship it further to get it to Asia but it's cheaper to start with and with more investment and bigger mines with better technology they will only get cheaper.

Another RSPT issue, when the economy falls over again and all these Mining companies start to lose money, who really believes Rudd will come forward with 40% cheques? He was spending big with stimulus and 'going hard with working families', is he really going to go and reimburse 40% of the 3$bil BHPB tanked at Ravensthorpe? Rudd will do the same thing Keating did when money was tight and he had legislated expenses, he'll change the legislation. If Keating can cancel WW2 pensions and get away with it Rudd will have no issues convincing the community that the Government can't afford to underwrite the losses of the major miners. Hence the reason banks won't finance Fortescue and Tom Albanese calls Australia his 'greatest sovereign risk'. If the 40% underwrite is useless to the industry then what? Henry himself said without it the RSPT is not viable, and here we are at that point.
 
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MasterOfReality

After forever
You can't have been working in the industry long if you believe what head office tells you...

When I started in the mines in 92 we were told that pit had a maximum of 6 years left. Every year we were told how it was no longer profitable and we have to increase production. At the time we were breaking production records left right and center.

In 97 25% of the workforce was retrenched because we were "producing too much"... Almost 1million ton was sitting in the stock pile waiting to be sold...

The pit is still going, producing more coal then ever and with a bigger workforce. I've been offered a job back there several times (seems like every other month now).... They are still being told the pit has only 3 years of life left....

I've worked at quiet a few mines and every single one head office will tell you how tight the operation is and how close they are to having to lay people off.

Mining has always been boom and bust and jobs have only ever been as secure as the current sales commitments but right now I'd say mining jobs are far more secure than they ever were through the 80s and 90s
I'd rather give creedence to what head office says, rather than the conspiracy theorists and self labelled mining experts underground.

No doubt you were aware that coal mining is a tight operation, especially in the pre-boom days prior to 2005/2006. 2 operations I worked at (one coal and the other underground metalliferous) pretty much shut overnight.

Factors such as coal price, equipment condition, signed contracts etc etc can affect a coal operation to what seems like a week by week basis. Even something simple as a major customer changing the requirements of the blend required can have a major impact on the life of mine. All of a sudden lesser quality coal looks better.

I was in a similar situation to you in 2002, which I happened to be working as a miner because there were no mining engineer jobs. The pit was going to shut one week, but then had another 2 years left in it the next week etc etc. It closed not long after because the geologists interpreted a huge dyke that killed the longwall, and combined with the age of the equipment (25 year old 4 leg chocks that were rated to 800t but should have been around 1000t), it all became too hard and the pit was shut.

But the funniest thing was listening to the miners underground and how they would keep the pit running and how they would all chip in and get the union to purchase the mine, and how management and engineers don't have a clue.

Good for a private laugh at crib.
 
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luke.b

Formerly DH Maniac
Wait a second, do the mining companies own the land, and thus everything contained in the land?

If the government wants to 'share super profits', why don't they start buying profitable land, or stop selling off the land?

All they're doing is punishing people/companies who are able to get rich.
 

thecat

NSWMTB, Central Tableland MBC
But the funniest thing was listening to the miners underground and how they would keep the pit running and how they would all chip in and get the union to purchase the mine, and how management and engineers don't have a clue.

Good for a private laugh at crib.
Na, the managers, undermanagers and engineers were all pretty switched on, well except those straight out of uni:p

best thing to do is take what is said that "state of the nation" head office adress and compare what's in the stock holders reports and then split it down the middle. Never ever listen to the bitter old bloke who cuts more coal at the pub and never gets out of the crib room.
 
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