Discuss industry trends crusher

China Jaw Crusher history of the development section, after a long practice requires appeared jaw crusher, hammer crusher, impact crusher, impact-type third-generation Sand and Sand.
Eighties of last century's machinery industry is still in the low period, when economic development is at a relatively steady state, are catching up with the development of China's economy flat, in general machinery industry has a cyclical development, generally Ten years is a cycle, the compliance with the order is from the early development of the industry gradually to the peak periods of peak period is over, and gradually the low period of the machinery industry. This development cycle is always the same, and it is not change.

Jaw Crusher and economic development of the industry is closely related to the chain. China's economic development since the eighties from the beginning to the momentum of rapid development of open, no matter which industry, including highway construction in China's railway construction, and real estate development, mining, water industry in the rapid development, with their promote the development of an economic industrial chain, repair to highway use of cement, gravel, sand, etc., which ushered in the mining, sand and gravel industry, the rapid development of the peak, while the production of sand and gravel mining and use to broken equipment, broken machinery so that the gradual development of the industry into the peak.

PE compound pendulum jaw crusher series dealing with the compressive strength of not more than 250Mpa function of the ore or rock, with a broken ratio, product size uniformity, low power consumption and easy maintenance. Metallurgy, mining, building materials, transportation, machinery and other industries ideal crushing equipment.
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Jaw Crusher development of the industry and to promote the development of steel industry accelerated the development of each industry are closely related with the industrial chain. In the crushing machinery industry entered its peak, crusher market is also very, very hot, because at the time, local government departments on the supervision of mining is not large, some private individuals to see the huge profits of mining mining industry. So at that time almost overnight, the local small-scale mining plant are to take out, so the sale of mining equipment at the time the form is very hot, resulting in a situation of short supply of mining equipment industry, situation, or even customers to the plant inside, as long as I saw a device, immediately to buy back the production, do not care about the quality of work product. So that is the crusher peak of development of the industry, but also the peak mining industry. However, the peak period in the machinery industry, the problems are caused by many, not just the enterprise itself, as well as government departments at all levels of management in a loose state. So whether the development is low during the peak period, we still have to look long-term release.

Jaw crusher maintenance

(A), the preparatory work before moving over
1, small check is good lubrication of bearings, bearing plates and elbow joints have enough grease.
2, should carefully check all fasteners are securely fastened.
3, check the drive belt is good, found a broken belt shall be updated with the phenomenon.
4, check whether the ore crushing cavity or other debris, if debris should be removed to ensure that the machine no-load start.
5, check whether the bolts from the top to return, gasket compression, T-bolts are tightened, should be noted that non-crushing machine at work from the top bolt and adjust the seat contact.
(B), the start crusher
1, the checks to prove that part of the machine and drive the situation properly, before they can start.
2, the series crusher can only start with no load.
3, the start, we must use a bell or other signal prior notice.
4 starts, if found to have abnormal situation, should immediately stop operation, to identify and eliminate abnormal situation, only to restart the crusher.
(C), use and maintenance of crusher
1, crusher normal operation only after the feeding began.
2, the crushing of materials should be uniform to join the crushing chamber, the side feeding should be avoided or filled with feeding, to prevent overloading or under unilateral overload.
3, under normal circumstances grinding mill, the bearing temperature rise of not more than 35, the maximum temperature does not exceed 70, as more than 70 should be immediately shut down, find out the cause to be removed.
4, stop, you should first stop feeding the work material to be broken completely discharge chamber was broken only after the turn off the motor.
5, in broken when, if the issues caused by broken cavity stop blocking material should be immediately shut down the motor, the material must be removed only after the restart.
6, tooth wear plate at one end, you can turn around to use.
(D), crusher lubrication
1, the constant attention and lubrication wear a timely manner, can guarantee the normal operation of the machine and extend the service life.
2, the grease used crusher, according to the use of the machine temperature, location and other conditions to decide. General use of calcium-based, sodium or calcium sodium based grease.
3, add bearing grease to 50-70% of volume, stone crusher must be replaced once every three months, for grease application of clean gasoline or kerosene, carefully cleaning the roller bearings.
4, elbow pads touch plate and bracket, the machine must be filled in the grease before starting.

Ten year trends in the development of mineral processing equipment

Through the combination of mechanical plant on-site observation of dynamics grinding mill, ball mill found in the actual production of coarse there is a reasonable position phenomenon, is now thrown down on the ball mill grinding body type and material movement trajectories and between force analysis, and explore the causes of this phenomenon. Found that the feed mill at the feed point selection device exists unreasonable. Thereby reducing the ball mill grinding efficiency and increased consumption. So in order to optimize the feeding device, to improve the irrational, the need for improvement of the feed point.
Improved mill feed inlet design
In recent years, as new technologies, new technology continues to improve, when the output of Taiwan ball great changes have taken place, with the specifications of the raw material open and closed-circuit grinding mill table and more than double the yield difference. Into the grinding particle size reduction, increased mill ventilation, to improve the mill's output, quality played a key role. To improve the mill ventilation, many factories have been made in this great effort and exploration. Set in the grinding mill to increase the blast and the combination of the end of ventilation, received a good effect, but correspondingly increases the energy consumption of the fan tail mill dust collection system with treatment difficult. Therefore the most effective way is to improve the feed inlet.

First, the device integration trend. As the number of modern dressing products and product objectives increasingly demanding taste. Therefore, when the selection of equipment manufacturers of crusher, prefer complete production line, due to the production line equipment for other equipment is optimized, can improve production efficiency and ease of manipulation.
Second, the process of localization trends. With the domestic research level, the recent patent application processing equipment significantly more emphasis on the support of their research results. Well, this will also encourage excessive scientists, mineral processing equipment for China to catch up with the world interested in the contribution to the advanced level.
Third, the device intelligence trends. As more research institutes, new thinking and new methods developed, and a variety of intelligent control theory applied successfully in other industries, with more advanced intelligent processing equipment manufacturers in the laboratory for debugging. I believe in the near future, a large number of new products will be filled with the intelligent processing equipment market.
Fourth, the production process of the trend. For a modern mineral processing nearly 40 years of experience, the major equipment manufacturers have begun to consider custom expert system for the entire production process customized for different geographical environments the most reasonable solution.
Five semi-automatic welding trend. This technique mainly for mineral processing equipment in contact with highly corrosive materials in the machine. This can reduce the oxygen by the application of welding, the use of new solder can improve the durability of the equipment 50% -75%.
At the control simple trend. In recent years, manufacturers of equipment to facilitate rapid application in the production line has been gradually integrated one-touch control, even if the manufacturers do not have professional machine control temporary staff can be achieved by simple control production. This is an expert on technology of enrichment.
VII, green energy trend. Since early this year after the Copenhagen conference, jaw crusher world leaders at the summit has made commitments. The industry is now the state will take measures to reveal excessive production of electricity industry to adopt more stringent environmental control. Then, using advanced technology applications of green energy-saving products selected will give a better chance of survival plants.
VIII, manufacturing orders trend. In the past, device model, performance, and more fixed, firms tend to have a certain stock. The specific customer needs at this stage because the increasing refinement of compounds, a direct result of manufacturing companies have to pursue the theory of the nominal zero inventory efforts.
September, equipment form the trend in Europe and America. In the experience of other countries, advanced manufacturing technology, shape of the device technology, the shape of the design of mineral processing equipment will gradually move closer to Europe. The new shape design can often make the customers more choice and want to try, long-term view, conducive to the overall development of the field of mineral processing equipment.
Ten, the device large-scale trend. Mainly for ball mill, the state has explicitly introduced the policy to terminate the 3.5m diameter of the end of the year following the production of small ball. This will inevitably lead to the manufacturers in order to seek development and survival, and have a higher technical difficulty of the new trial and a large mill.

Sandfire seeks $102M for DeGrussa

SANDFIRE Resources has come back to the market to raise $A102 million to accelerate development at its DeGrussa copper-gold project in Western Australia after its share purchase and offtake deal with Korean smelting giant LS-Nikko officially keeled over last month.

The funds will be raised via a 1 for 12 accelerated non-renounceable pro-rata entitlement offer at an offer price of $6.60 to raise around $72 million and will consist of an institutional component and a retail component.
The entitlement offer price represents a 15.2% discount to Sandfire’s closing price on Monday.
Sandfire will also launch an underwritten institutional placement to raise a minimum of $30 million.
The proceeds of the raising, as well as Sandfire’s existing $35 million in cash resources, will go towards completing the current pre-feasibility study, scheduled for this quarter, and the definitive feasibility study, scheduled for the end of the first quarter of calendar 2011.
Funding will also go towards other predevelopment and infrastructure activities required for DeGrussa as well as completing the approvals process.
Funds raised will also be spent on pre-stripping of the initial open pit which is targeted to begin in the second quarter of calendar 2011, as well as for deposits on key long-lead items required for the proposed 1.5Mtpa concentrator and for working capital.
Sandfire managing director Karl Simich said after considering funding alternatives with corporate advisor Goldman Sachs, the entitlement offer and placement was considered the best option for shareholders.
“Firstly, it facilitates the introduction of new Australian and international institutional investors to the company’s register while allowing existing shareholders to participate on attractive terms,” he said.
“Secondly, it enables the company to complete a DFS and enter into project funding discussions in a strong financial position and with the ability to commence development of the high-grade open pit resources at DeGrussa while construction of the plant and underground development commences. This will ensure that we are able to commence copper-gold production in a timely manner.
“Finally, it ensures that we can maintain our robust exploration activities at DeGrussa, both within the 6-kilometre long near-mine corridor and, more broadly, within our 400 square kilometre tenement position, where we consider there is potential for additional new discoveries.”
Recently, the company announced plans to increase the targeted design throughput rate for DeGrussa processing facility to 1.5Mtpa following a phase 3 resource upgrade to 10.67 million tonnes grading at 5.6% copper, 1.9 grams per tonne gold, 15gpt silver containing 600,000t copper, 660,000 ounces gold and 5.1Moz silver.
Sandfire expects to announce a further update to the resource inventory later this month after completing infill drilling and a revised resource estimate for the dispersion zone of the near-surface oxide copper.
Today’s capital raising news comes after Sandfire announced last month its share purchase and offtake deal with Korean smelting giant LS-Nikko was effectively over.
Shares in Sandfire are in a trading halt that is expected to last until the release of an announcement or the start of trading on November 18.
Prior to entering the trading halt, Sandfire was trading at $7.78.

China Mining equipment CO.,Ltd is a professional manufacturer of mining crusher equipment and industrial grinding mill in China.
Mian Site: http://www.ucrushers.com
product list:

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All aboard Brockman 4

AN on-location look at Rio Tinto’s billion dollar modern mine, set to centralise its existing and future Pilbara operations and double iron ore output as it continues to expand. By Brooke Showers

Brockman 4 is the latest addition to Rio Tinto’s iron ore mining operations in Western Australia’s Pilbara region.
The $US1.5 billion mine was opened by Parliamentary Secretary to the Premier, Treasurer and State Development Minister Helen Morton MLC and Rio Tinto chief executive iron ore and Australia Sam Walsh.
Located 60 kilometres northwest of Tom Price, the mine is expected to have an initial output of 22 million tonnes per annum of high-grade iron ore with the potential to expand to 40Mtpa.
With a 30-year mine life, Brockman 4 is also ideally positioned to serve as an infrastructure service hub for the future development of nearby deposits.
“As we have made clear recently, growth in our Pilbara iron ore operations is back on the agenda and Brockman 4 features significantly in our future plans,” Walsh said.
“The mine has been planned very much for future expansion to double the initial capacity in mind, and we would expect that additional tonnage to form an important component of our planned expansion of Pilbara capacity to 330 million tonnes per annum.”
The mine workforce has 530 full-time employees, of which 16% are female and 8% are indigenous – both figures that Walsh intends to increase. He said Brockman 4 had attractive working conditions, including an 8 and 6 roster.
The camp facilities are first rate, a growing trend at many remote minesites. Brockman 4 has a swimming pool, fitness centre, tennis courts, wet and dry mess, and a netted enclosure to polish up the golf swing.
It has 1000 dongas, all including a phone, plasma television, fridge, air conditioning, spacious shower and vanity unit.
There are two different locks on the drawers and wardrobes, so employees can secure their personal items onsite while at home on a break. This allows each donga to be shared by two workers on opposing rosters.
Utilising the latest equipment, Brockman 4’s open cut mining operation hosts three 500t Hitachi shovels, a 350t Hitachi excavator and 15 Komatsu 830E 220t dump trucks.
Supporting infrastructure onsite includes a fixed plant maintenance workshop, tyre and light vehicle maintenance facility, and integrated process and potable water systems.
It has a two-stage dry processing plant, including primary and secondary crushing, sample stations and train load-out system.
The anticipated daily movement of materials is 160,000t and Rio Tinto expects to load 20 trains per week, linked by the 50km rail network.
The hub model has the potential to align all the Rio Tinto mine operations into one central train system for ship loading.
“Mesa A/Warramboo and Brockman 4 demonstrate our strategy of substantial investment in high-quality, long-life, low-cost assets,” Walsh said.
“They are outstanding deposits, close to existing infrastructure, and each promises excellent commercial returns.”
Brockman 4’s pit designs are expected to yield about 600Mt of high-grade ore of more than 60% iron and 450Mt of a lower 50-60% iron grade, which will be stockpiled for future processing.
Rio Tinto also has studies underway to take its Cape Lambert port from 80Mtpa to 180Mtpa to help bring its Pilbara total to 330Mtpa.
The company also will have five new mines or mine expansions to meet capacity.
Walsh expects the free on board price for iron to drop 13.3% in the December quarter of this year to $US127 per tonne.
Brockman 4 has land-use agreements in place with traditional owners, the Puutu Kunti Kurrana Pinikura and Eastern Guruma people.
Rio Tinto is committed to having all employees in WA complete cultural awareness courses with Aboriginal leaders to strengthen the company’s understanding of Aboriginal people.
The company has created better ways to support its Aboriginal neighbours in the workplace through this knowledge.
The strategy for Rio Tinto to focus donations into four key areas – education, health, the environment and culture – has helped the company address issues facing the community. In 2009 the company contributed $27.8 million in community investment activities in WA.
Brockman 4 has a swimming pool, fitness centre, tennis courts, wet and dry mess, and a netted enclosure to polish up the golf swing.

China Mining equipment CO.,Ltd is a professional manufacturer of mining crusher equipment and industrial grinding mill in China.
Mian Site: http://www.ucrushers.com
product list:

mobile crushing plant,raymond mill manufacturer,vertical roller mill

Iron ore chauffeurs

YOU know iron ore is hot when a limousine company tries to roll over a couple of Pilbara wannabes. But what is the latest Chinese interloper driving at? The Metal Detective by Stephen Bell

Hong Kong-based Wah Nam International achieved several firsts last week when it unveiled separate scrip bids for Brockman Resources and FerrAus. It wins a prize for corporate diversification.
Wah Nam does own a copper mine in southern China, but its core business seems to be offering limousine and coach services from Hong Kong airport.
So a multi-billion dollar plunge into Western Australian iron ore mining and infrastructure is a bit of a U-turn.
Another first is the volume of paper involved in the bid.
Wah Nam has 3.9 billion shares on issue, valuing the company at $6.7 billion Hong Kong dollars, or $A870 million.
According to its offer document, it may have to issue up to 4.5 billion more shares if all options in Brockman and FerrAus are exercised and the offers succeed.
The notional $1.2 billion bid value is way more than Wah Nam’s current market capitalisation.
Yet the company talks confidently about consolidating Brockman’s and FerrAus’ projects and potentially building a transport corridor to Port Hedland.
It is a much bigger cab ride than the Wah Nam chauffeurs are used to.
A ride in a Mercedes Benz limousine from Hong Kong airport to Kowloon Bay, a distance of roughly 40 kilometres, will set you back $100.
It is around 300km from Brockman’s Marillana deposit to Port Hedland and the tab for a new railway is $3-4 billion – pretty big money for a small conglomerate.
The Metal Detective can only assume Wah Nam is a stalking horse for Chinese steelmakers and infrastructure groups – the most likely funding sources for such a big infrastructure play.
MD also quite likes the theory that the offer may be a clever ploy designed to flush out third-party bids.
Given that Wah Nam already holds 19% of FerrAus and 22.6% of Brockman, that scenario may deliver it a nice trading profit if the likes of Fortescue Metals Group were to enter the fray.
Credit Suisse notes that FMG’s recent refinancing lifted the merger and acquisition restrictions associated with its 2006 senior notes covenants.
“The new notes allow FMG to be more corporately active,” it says.
Although FerrAus and Brockman currently own stranded deposits, the broker says it would be “amazed if FMG has not already had serious discussions with Brockman and perhaps FerrAus too regarding possible BCI-style infrastructure access JVs”.
Longer term, the bank sees a risk that FMG’s Chichester projects will not reach their 90 million tonne per annum target, meaning that the shortfall could be made up with additional ore from projects such as Brockman/FerrAus.
As it stands, MD can’t see many Brockman and FerrAus punters jumping at the chance to swap their investments for wads of limousine-backed Hong Kong paper, even if Wah Nam is promising a listing on the Australian Securities Exchange down the track.
If nothing else, it illustrates China’s keenness (or should that be desperation?) to snaffle independent Aussie iron ore resources, no matter how large the hurdles.
One reason may be that the Asian Dragon sees continued tightness in the market ahead.
Recent work by Macquarie suggests that supply-side iron ore growth is set to underperform relative to stated plans in coming years.
Thus, the long-feared market surplus may still be some way off.
“There is a huge volume of potential supply on paper, but myriad issues commonplace to the industry are likely to cause significant delays,” Macquarie said, citing problems such as infrastructure, environmental permitting, spiralling capital costs and the “disinclination” of equity markets to finance projects.
As a result of delays and the “degradation” of Chinese mines, increased volumes of higher cost Chinese domestic ore are required to balance the market for longer, the bank says.
Cost inflation in the Chinese domestic industry is thus key, and “we think marginal suppliers will keep the average spot price well supported above $US135 per tonne during 2011-13”, it said.
The other interesting angle to Wah Nam’s bid is the effect on the North West Iron Ore Alliance, of which Brockman and FerrAus are members, alongside Atlas Iron.
The obvious question is why didn’t Wah Nam bid for Atlas?
It is not as though Atlas is a lot more expensive – its market cap is $A1.6 billion – and it is already in production.
Perhaps Atlas is part of another yet-to-be-unveiled Chinese gambit, perhaps involving Ridley and/or Balla Balla magnetite.
Apparently it is business as usual at the NWIOA as it seeks to finalise the feasibility study on its $2.1 billion port at South West Creek by early next year.
The ultimate aim is to start shipping from the new port, which is critical to Atlas’ long-term growth ambitions, by 2013.
Even before the bid lobbed, that target was seen as highly ambitious by most in the industry, given the amount of environmental permitting and construction involved.
Industry insiders believe that 2014 is probably a more realistic aim for the alliance’s two berths to start shipments.

Letter to the editor: Dryblower remembers Marengo and the day George Soros broke the bank

Following yesterday’s Dryblower column on George Soros and his investment in Marengo Mining, MiningNews.net has published a reader’s response to the column.

I note that reference was made to Marengo Mining Ltd in today’s edition of Mining News.
In regard to the article by Dryblower on George Soros I would like to clarify a number of points.
In September 2009 Quantum Partners LDC (a member of the Soros Group) acquired a 19.9% stake in Marengo Mining, by subscribing $A10 million to a $A22 million institutional placement, raised in both Australia and Canada.
Marengo Mining is also listed on the Toronto Stock Exchange and has been since April 2008, in addition to its listings on the Australian Securities Exchange and the Port Moresby Stock Exchange (PNG).
Marengo Mining’s Yandera Project is located in the Independent State of PNG and, as such, will not be affected by the federal government’s proposed super profits tax.
Regards
Les Emery
Managing Director
Marengo Mining
Letters to the editor are always welcome. Please keep them short. Some submissions may need to be edited.

China Mining equipment CO.,Ltd is a professional manufacturer of mining crusher equipment and industrial grinding mill in China.
Mian Site: http://www.ucrushers.com

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Economists throw support behind super tax

A GROUP of 20 academics and economists has weighed in on the super-profits tax debate, backing the Rudd government’s proposal that mining companies should pay more.

The group, including former chairman of the Australian Competition and Consumer Commission Allan Fels, issued a statement today supporting the proposal to claw back 40% of mining’s super profits.
They say the ongoing debate over the tax has been dominated by misinformation but admit it is still appropriate for the big miners and government to negotiate the finer details.
“Mining is different to other industries in that it uses and depletes natural resources,” the group said.
“The existing royalty system reflects the fact that it is desirable to levy a charge for access to publicly owned mineral resources, in addition to normal corporate income tax.”
They said the move was consistent with effective economic strategy.
“The miners are paying the wrong kind of tax,” Fels told ABC Radio.
The University of Queensland’s John Quiggin said there was no reason to think that the tax was going to affect the world price of minerals, or lead to higher food costs.
The group also won the backing for a bigger tax on profits from the Minerals Council of Australia, but it was critical of the government’s “practical implementation” and design of the resource super-profits tax.
MCA chief executive Mitch Hooke accused the government of rejecting mining industry overtures for genuine consultation on the tax.

China Mining equipment CO.,Ltd is a professional manufacturer of mining crusher equipment and industrial grinding mill in China.
Mian Site: http://www.ucrushers.com

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SA miners hit by double tax: SACOME

SOUTH Australia’s peak mining lobby has come out swinging against the federal government’s stance not to credit state royalty increases against the Minerals Resource Rent Tax, saying its fledgling iron ore and coal industry would be left facing a “double tax”.

The South Australian Chamber of Mines and Energy (SACOME) said it had written to federal Resources Minister Martin Ferguson arguing that recent increases in the state’s mining royalty rate announced in last month’s state budget should be credited, as originally agreed, under the terms of reference for the new MRRT.
According to the terms of reference for the MRRT, all state and territory royalties can be credited against the MRRT.
However, the issues paper released by the Policy Transition Group states that “state and territory royalties will be creditable at least up to the amount imposed at the time of announcement, including scheduled increases and appropriate indexation factors”.
“It is our understanding that the government’s position is that unscheduled royalty increases after May 2010 are not creditable against the MRRT,” SACOME chief executive Jason Kuchel said.
“This is unsatisfactory and contrary to the terms of reference. It is clear that the terms of reference does not delineate between scheduled or unscheduled increases.”
He said with royalties in South Australia recently increasing from 3.5% to 5.0%, it would be unfair for South Australia’s mining industry to be hit with a “double tax”.
“In discussions with the state government, SACOME was left with the clear impression that it also understood that all royalties would be credited under the MRRT – and we now call on the SA government to strongly lobby their federal counterparts on behalf of the South Australian mining industry in this matter,” Kuchel added.

China Mining equipment CO.,Ltd is a professional manufacturer of mining crusher equipment and industrial grinding mill in China.
Mian Site: http://www.ucrushers.com

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Aussie dollar leads to more tax uncertainty

THE impact of the strong Aussie dollar could ultimately force the Queensland government to increase coal royalties and upset the big three’s mining tax agreement with the federal government. Mine Life senior resources analyst Gavin Wendt discusses some of the pitfalls ahead.

Treasurer Wayne Swan was busy defending the federal government’s economic performance yesterday, after mid-year Treasury forecasts anticipated an almost $A10 billion loss in revenues due to a stronger Australian dollar versus the greenback.
Queensland Treasurer Andrew Fraser was more concerned that the state was expected to receive $1 billion less in GST payments from the federal government over the next four years.
“Decreasing GST payments, combined with the likelihood of lower than forecast mining royalties due to the high Australian dollar, means state budget revenues remain under pressure,” Fraser said yesterday.
“GST payments to the state generally make up almost a quarter of our total revenue and, like all revenues, GST fell dramatically during the global financial crisis.
“There is no doubt that the state must stick rigidly to its economic reform agenda, including exercising spending restraint to return the budget to surplus.”
But Wendt, a former Fat Prophets senior resources analyst before he went independent, believes that increasing coal mining royalties is one of the options ahead for the Bligh government.
“The Queensland government is flogging off QR National because they need cash, their budget is probably as bad as New South Wales,” he said.
“There are two things you can do to improve your finances: you can cut back on your spending, and they are losing a lot of votes – they are probably going to lose an election on the expenditure cutbacks they have made.
“The other thing you can do obviously is try to increase your revenue and one of the easiest ways to do that is to whack the mining industry.”
Such a move will not be welcomed by the likes of BHP Billiton, Rio Tinto and Xstrata.
The big three are already upset that the federal government does not plan to credit future state royalty hikes under the proposed Minerals Resource Rent Tax.
Wendt said the cracks were starting to appear in the tax.
On moves from the federal government to address revenue shortfalls, he suspects the MRRT could either be broadened from iron ore and coal to other commodities, or the tax rate could be increased.
But he does not expect the Aussie dollar to surge beyond parity with the greenback in the next few months.
“I think we are going to see waxing and waning in the value of the US dollar but I don’t think we are going to see a rally in the US dollar by any means,” he said.
“I think commodity prices are going to stay strong, which is certainly going to provide support for the Aussie dollar.
“But I would think that we are not going to see too much movement away from parity over the next three to six months.”
Even though miners face tighter margins because of the strong Aussie dollar, Wendt noted that a weak US dollar was great for demand.
“It just means that commodities are cheaper to buy in every other currency,” he said.
“So for every other currency the buying power goes further.”
He added that investors would also speculate more in commodities.

China Mining equipment CO.,Ltd is a professional manufacturer of mining crusher equipment and industrial grinding mill in China.
Mian Site: http://www.ucrushers.com

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All going to pot

THE growing exoticism of the mining sector is exposing another skills shortage – in investor knowledge. Robin Bromby tries to fill in some of the gaps.

Over the past decade, we have seen an explosion of skills and knowledge within the mining sector. Once it was all about gold, base metals or iron ore. There were a few exotic stories around, but the Australian mining scene was basically meat and potatoes.
Not only has the mining sector become international over the past 20 years, we have mining executives who can hold their own around the world when it comes to uranium, rare earths, tungsten, zircon, molybdenum and so on. And now, of course, potash and phosphate.
The great gap of knowledge comes at the next level down – the investors.
Those who buy and sell shares can read the “investor presentations” that exploration and mining companies work up for brokers and fund managers and others who already have (one hopes) considerable knowledge about the specific fields in which those companies operate.
There are, too, some very well informed retail investors. But, I suspect, there are also some who only have a grasp of the rudiments.
You get a sense of this from share price movements.
Just mention “heavy rare earths” and that particular share is off to the races. Lithium, too. Of course, we saw it most acutely a few years back with uranium. Suddenly every gold explorer or base metals explorer found some indicators on their ground for uranium, and in the punters went.
So few of them realised that uranium is found widely but that is a lot different from finding it in economic quantities. Ditto rare earths and even manganese.
Some companies have taken the time to include on their websites an information section on the particular commodity they deal in. Lynas Corp, for example, has a large section explaining all about rare earths.
This is something that all companies should consider. They should have it done by someone who is not in the inner circle but who comes to the subject fresh, will ask the basic questions – and answer them.
This thought came to me when I stumbled over an article written by Fred S. Mohme, a geologist at the University of Illinois in 1929.
I have written a number of articles about potash and the growing demand for fertilisers. We also have a nascent potash sector with a number of companies seeking or developing potash projects.
This is a shiny new investment story, and we are all excited about it.
It may be new for Australia and Australian investors, but it is a pretty old story for the Canadians (who produce 62% of the world’s output) and even older for the Europeans.
Mohme, explaining the European potash industry to his readers in 1929, reminded them that Germany had begun producing potash 70 years before that. It wanted the product to make fertilisers to help feed its growing population. Incidentally that is the same rationale as present, except this time it is about feeding the world.
Eighty-five years ago, Germany and France between them supplied 95% of the world’s potash, with the rest coming from the US and Poland. Germany was the biggest player and, like Canada, its potash was at depth – between 365 metres and 1000m in Germany’s case.
The Germans kept the potash industry on a tight rein. Every producer had to belong the potash syndicate, which had sole selling rights and could order the closing of any mine it deemed unprofitable.
Interestingly, in 1929, the world’s known potash resources were concentrated in Germany and France’s Alsace region, with the next biggest deposits in Nebraska and Abyssinia. Ethiopia, as it is known these days, is about to emerge as a large potash producer with Canada’s Allana Potash gearing up to develop a very large deposit.
The first big changes came in the 1950s when the US and the then USSR stepped up exploration to break the European cartel. Today Russia is the second largest producer after Canada.
To my shame, considering all that I have written about potash, I was unaware of all this back story.
So here is the message to mining companies: don’t assume investors know much about your commodity.
Most of you spend a great deal of time getting up Powerpoint presentations for the big end of town.
Think about using your website to educate your smaller investors, giving them an understanding both of the attributes of your commodity and your project, but also some deeper understanding of the history. The payoff should be that more investors will stick with you for the long haul.
This article first appeared in the October 2010 edition of Australia's Mining Monthly magazine

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Swan defends resource tax

FEDERAL Treasurer Wayne Swan has come out swinging at mining industry critics of the government’s plan to impose a resource rent tax on the mining sector, saying this morning the tax is “in the nation’s interest”, and the associated infrastructure fund would help the entire industry avoid the capacity constraints seen in the early part of the decade.

Speaking to the Australian Business Economists meeting this morning in Sydney, Swan reiterated government concerns about the development of a “two-speed economy” in Australia, pointing to experience of resource booms overseas as a model for Australia to avoid.
“Other countries have gone through similar experiences in the past – you may have heard of the 'Dutch disease' where the exploitation of natural gas in the 1970s is supposed to have hollowed out the Dutch economy. Manufacturing and other industries found it difficult to compete with the higher exchange rate that bountiful resource exports bring,” he said.
“In more extreme forms it is part of what is called the natural resource curse – there are countries today that would have higher GDP per head if they'd never discovered oil.”
Swan said the success of the resource sector drives up the exchange rate, making it hard for other Australian industries to find export markets and compete for skilled workers.
Swan disputed claims that the new tax would lead to an industry-wide slowdown in investment, reiterating government claims, based on KPMG Econtech modelling, that the resource rent tax and associated package would drive up, rather than reduce, investment and production in the Australian resource sector.
“The move to a super profits-based tax 20 years ago, the petroleum resource rent tax (PRRT), rejuvenated investment and production in offshore petroleum,” he said.
“Before PRRT, all the discussion was about the short remaining life of Bass Strait resources. Today Bass Strait is the largest producer of crude oil and second-largest producer of LPG and condensate in Australia,” he said.
The government has previously claimed that its independent modelling suggested mining investment would be 4.5% higher, jobs 7% up and mining production 5.5% higher in the long run under its scheme.
“The fact is, the government's reforms will tax the mining industry better. In fact, the most significant spend in the entire tax package is over $8 billion every year in state government royalties that will be refunded or credited to mining companies,” he said.
He said mining investment, jobs and production will grow when state-based royalty schemes are “cashed out” by the new tax scheme.
“This is because royalties apply no matter how profitable a mine is,” Swan said.
“Royalties are generally levied on revenue or the volume produced, whereas the Resource Super Profits Tax only taxes mines that earn super profits. This means start-ups and projects that are more marginal will be relatively advantaged under our new system,” he said.
“Cashing out royalties with the Resource Super Profits Tax will increase Australia's economic resources by allowing existing mines to operate longer or at higher capacity and by fostering investment in new mines.”
The government argues that its plan to establish a dedicated infrastructure fund will also significantly help the industry. $700 million will be tipped into the fund from 2012-13, with the amount spent expected to grow in the subsequent years.
“We all remember the stories from Mining Boom Mark I of ships queued off the coast, waiting to be loaded with coal, and bottlenecks at our major ports,” Swan said.
“To some extent, this was and will remain unavoidable – supply can never perfectly match demand, and it won't always in future. But this mining boom is not unexpected, and we are acting to ensure we are well-placed to benefit from it.”
And he dismissed complaints from the big miners, particularly BHP Billiton and Rio Tinto, that the new tax would discourage investment in the sector, saying they are entitled to speak out in their own interest.
“I'm not going to deny the obvious – the most profitable mines in this country will pay more tax under the Resource Super Profits Tax. I'm also not going for a minute to deny that the owners of those mines will object to that. It's a free country, and they're absolutely entitled to voice their displeasure,” Swan said.
“They will, as they should, prosecute their interests, as I should prosecute the national interest.”

 

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Canberra should tell the truth: Forrest

FORTESCUE Metals Group chief executive Andrew Forrest has slammed the proposed new resources super-profit tax as an attempt at nationalising the mining industry, at a heated media conference in Perth this morning.

“We wouldn’t all be here if Canberra had told the truth,” he told journalists.
“I want to appeal to my fellow Australians in Sydney and Melbourne, and all of those who have been listening to the prime minister talk about their working families as though somehow, my hardworking wife and I are a pair of slackers.”
Forrest said describing the move as a super-profits tax is incorrect and the proposal will quickly disappear if Canberra tells the truth and correctly describes the tax as “nationalisation”.
Forrest was joined by his FMG colleague Russell Scrimshaw, directors from Gindalbie Metals, Iron Ore Holdings, BC Iron, FerrAus, Swan Gold and Brockman Resources.
The other mining executives at the meeting shared the sentiments of the FMG boss.
BC Iron chairman Tony Kiernan said the proposed RSPT is an abuse of power on the government’s part.
“What we’ve got here, with respect to the government, is a substantial abuse of trust,” he said.
“We’ve made our decisions based upon a taxation regime.”
BC managing director Mike Young described it as overkill.
“Look, this tax reminds me of someone that wants to get rid of termites and to do so, they blow up their entire house,” he said.
“The termites are gone – so is the house, insulation and everything.”
Swan Gold’s Michael Kiernan said his group of companies would be looking to Indonesia to invest, as a small developer like his company will not be able to get funding to get projects up and running in Australia.
“Indonesia has a very receptive government that’s changed their mining laws,” he said.
“Their taxation regime is average – it’s not 57 per cent.”
Unlike, BC’s Nullagine project, Brockman’s flagship Marillana iron ore project is yet to secure funding.
“One of the key things for us during this year of uncertainty now created by this tax is the raising of sufficient capital to start construction of the project,” Brockman MD Wayne Richards said.
The group is also concerned about the ramifications for their employees and working families.
Young said he’d started BC 3.5 years ago with himself as the only employee, and now has 24 workers.
“That’s a great thing to do, giving 24 people jobs,” he said.
“It’s a great feeling, providing opportunity for people and I think this tax takes that opportunity away from a lot of companies.
“Please understand, it’s not all about me, it’s not all about our balance sheets and we need to appreciate that this affects every working Australian,” Tony Kiernan added.
FerrAus MD Mike Amundsen said he’d had calls from concerned shareholders after billions was wiped off Australian mining stocks in the past few days.
“All Australians are hurting now so I can’t imagine what it’s going to mean for the future,” he said.
The group urged Canberra to reconsider the RSPT, as the mining industry is what got Australia through the global financial crisis.
“We need to sit back and look at this in a very clear and transparent way and hear our pleas in Canberra so we can move forward in a very clear and internationally competitive market,” FMG executive director Russell Scrimshaw said.
“We need to protect what’s working well.”

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New tax a threat to Miitel viability: Mincor

MINCOR Resources is set to restart production from its Miitel nickel mine, but has warned that the federal government’s new resource super-tax threatens the operation’s future viability.

The nickel producer said today that it plans to rapidly move to reopen the mine, in Kambalda in Western Australia, with mine restart costs tipped to be less than $A1 million.
Modelling carried out by Mincor, with the help of external tax advisers, showed it was in the company’s best interests to restart production immediately as Miitel would benefit from a two-year window before the new resource super-tax was introduced in mid-2012.
However, Mincor also warned that the new tax would have a significant impact on the future viability of the Miitel operations.
According to the modelling, if the mine was restarted in a post-2012 tax environment, the impact of the proposed new tax would see the total tax rate for the project increase considerably above the current rate of 41%.
“In essence, the modelling shows that if the mine was developed as a completely new project under the new tax regime, and without the benefit of past expenditures, the total tax rate would be a deeply unattractive 57 per cent,” Mincor said.
“If the benefit of past expenditures were included, this total tax rate would reduce to a still unattractive 55 per cent.”
Mincor also warned that an extension beyond the initial four-year mine life at Miitel could be in jeopardy as the project would then be exposed to the new tax.
“As with all of Mincor’s mines, the company has high expectations that the initial four-year mine life will be substantially extended through exploration, and it is the viability of these possible future extensions that are placed in doubt by the new tax,” the company said.
“Such extensions would attract tax of approximately 55 per cent.”
The company also highlighted the way in which the tax rate was adjusted under changing commodity price assumptions.
“The model shows that under the proposed new system the tax rate of around 55-57 per cent remains unchanged at high, low and middling nickel price assumptions,” the company said.
“Under current tax legislation, the tax rate rises under low price assumptions and declines under high price assumptions.
“This means that, under the resource super-tax, the federal government will effectively subsidise marginal or sub-economic mines during periods of lower commodity prices.
“This has profound implications for economic efficiency, resource investment, and Australia’s status as a market economy.”
The tax modelling was based on a life-of-mine nickel price assumption of $US9 per pound and an exchange rate of US90c.
Mincor has begun site works at Miitel with initial production set to resume as early as next month and ramp-up to full production tipped to begin from July 2010.
Production is forecast at 4500-5500t of nickel-in-ore per year during the initial four-year production schedule at life-of-mine cash costs of around $5.50-6.00/lb of payable nickel.
The project’s restart ore reserve, including the recent N29 discovery, is 616,000t at 2l.7% nickel for 16,400t of contained nickel.
The mine was placed on care and maintenance in December 2008 in response to the global financial crisis.
Shares in Mincor have dipped 1c to $1.63 in afternoon trade.

 

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No tax on existing investments: BHP

BHP Billiton’s newly appointed chairman says the federal government’s proposed 40% tax on super profits must only apply to new investments and the proposed tax may threaten Australia’s competitiveness and jeopardise future investments.

In his first letter to shareholders since being appointed chairman in late March, Jac Nasser said BHP had no issue with a review and reform of the tax system, but any reform must be conducted around sound principles.
“Any reform proposal must only apply to new investments, not existing investments,” he said.
“Additionally any reform should not disadvantage the resource industry compared to other industries in Australia, and it absolutely must not disadvantage the Australian resources industry compared to other countries.
“In other words, any reform must not destroy the necessary incentives to keep investing in Australia’s growth engine, the resources industry.”
In 2009, BHP paid $A6.3 billion in taxes of which $3 billion was paid to federal government company taxes, $1.9 billion to state government royalties, and $1.45 billion to federal government petroleum taxes.
Nassar noted that the government’s proposed 40% tax on super profits would increase the total effective tax rate on BHP’s Australian profits by 14% to 57%, which compared to tax rates of 23% and a range of 27-38% in Canada and Brazil respectively.
He also warned that the proposed tax may threaten Australia’s competitiveness and jeopardise future investments.
“The risk is that Australia could now be seen by the rest of the world as a less stable and less competitive place for long-term investments,” Nassar said.
“If [the proposed tax] eventuates, the great work of Australians to build the strong economic foundation of the country over decades could be undermined, representing a crucial turning point for Australia.”
The world’s biggest miner is reviewing its Australian operations and investment plans in light of the proposed tax and will hold shareholder information sessions around Australia to update shareholders on its plans.
Meanwhile, a full-page advertisement titled “An open letter to the prime minister from the WA business community” appeared in today’s the West Australian newspaper.
The advertisement outlined the Western Australian business community’s concern about the impact of the proposed tax on the resources sector.
“As major employers in this state, we know that our success, like the success of so many others, big and small, depends on a strong and successful resources sector,” the advert said.
“We don’t want that put at risk.
“We ask you to re-think your decision to impose a damaging tax on one of Australia’s key industries.”
The advertisement was sponsored by the WA Chamber of Commerce and Industry and was signed by mining executives, including Fortescue Metals Group executive director Andre Forrest, BHP Billiton Iron Ore president Ian Ashby, Rio Tinto Iron Ore executive director and chief executive Sam Walsh, and Hancock Prospecting chairman Gina Rinehart.
Shares in BHP were trading $1.31 lower at $37.33.

 

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Nullagine still on track: BC Iron

BC Iron says its Nullagine iron ore joint venture development remains on target, a day after its joint venture partner Fortescue Metals Group announced it would put two of its key Western Australian iron ore projects on hold.

The Perth-based iron ore play said FMG’s decision to “shelve” its Solomon and Western Hub expansion projects in light of the Federal Government’s resource super-profits tax had no effect on the development plans at Nullagine as ore mined from this project would be transported through FMG’s Chichester operation.
“The company is aware of uncertainty created by the recent announcement of a proposed resource super-profits tax, however, it can confirm that its development timetable remains unchanged and on track despite the proposed resource super-profits tax,” BC Iron said.
BC Iron is targeting start of mining at Nullagine later this year and first ore on ship during December.
At a production rate of 3 million tonnes per annum, the partners plan for shipments of 1Mtpa by June 30 next year.
BC Iron added the proposed tax would have a negative impact on the resources industry and the company’s plans for additional project development in Australia.
Last month, the JV partners were formally granted the mining lease for Nullagine by the WA Department of Mines and Petroleum.
The project comprises a probable reserve of direct shipping ore of 36Mt grading 57% iron with total resources of 89Mt at 54.1% iron.
Shares in BC Iron were trading unchanged at $1.63, while FMG shares were at $3.87.

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Henry, Rudd taking flak

TREASURY secretary Ken Henry’s claims that the resources super-profits tax would not affect investment have been challenged while Prime Minister Kevin Rudd has been accused of panic in response to the global financial crisis.

Canadian tax authority Professor Jack Mintz – who modelled the effect of a similar tax in Alberta – told an Australian School of Taxation conference that the Henry Tax Review “failed to recognise how its recommendation could discourage investment in mining much more than for other industries”.
The Australian quoted him as saying the report had considered resource taxation and company taxation in different chapters and, as a result, overlooked the effect of the increased combined tax burden on investment.
He did concede the RSPT was well designed and would have no influence on investment in the absence of company tax.
Meanwhile, Australian National University Research School of Economics director Professor Warwick McKibbin said the Rudd government “panicked” and “rammed through” decisions fraught with risk.
He accused the government of overspending on its stimulus package by putting money into areas it could not reverse and then deciding that “because of politics they had to get their spending back so they could claim they had fiscal surplus – for which there is no economic basis, by the way”.
“So they come up with a really badly designed resource tax to try and get the position to look good three years from now and, in the middle of a sovereign risk crisis, exposed the economy to a reassessment of sovereign risk.”
McKibbin, who is a member of the Reserve Bank board, also accused Henry of not only failing to consult experts on economic issues, but of trying to silence them.
He told the Age he was stunned by Henry’s call this week for academics to “put down their weapons” and stop nitpicking over government proposals such as the emissions trading scheme.
“The ETS was a flawed scheme. Had the government got it through it would be dead by now because of the financial crisis.
“I have enormous respect for Ken Henry, but he can’t believe that you should have consensus because it is better to have bad policy that everyone agrees with than eventually get good policy that will work.”

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Minor changes to the RSPT?

THE Rudd government is tipped to modify its controversial resources super-profits tax, but coal and iron ore miners are still expected to get the brunt of the damage.

Unnamed government sources told the Australian Financial Review that up to $A4 billion can be saved by binning the badly-received exploration rebate which accompanies the RSPT, along with the 40% capital allowance policy for unprofitable mining companies.
These savings could mean low-priced resources, such as those targeted by the quarrying sectors, could be removed from the scope of the RSPT, according to the sources.
The newspaper reported that the government might announce its changes to the RSPT this Friday, with the new tax push likely to be centred on the big miners such as BHP Billiton, Rio Tinto and Xstrata.
On Monday the Australian Bureau of Agricultural and Resource Economics forecast strong growth in coal and iron ore earnings for the next financial year because of higher commodity prices.
These better expectations for Australia’s export-leading industries will undoubtedly attract government attention.
Treasurer Wayne Swan already used Queensland coking coal royalties as an example of how Australians are being “short changed” over mineral wealth last week.
He also views the recent agreements by BHP and Rio to pay higher state iron ore royalties as another example of Australians not getting a fair return.
Meanwhile, the International Monetary Fund has backed the implementation of a RSPT.
According to a report on ABC News website, IMF deputy head of tax policy Philip Daniel told a tax conference in Sydney that the IMF welcomed the RSPT proposal in principle.
“It shifts the whole Australian resource tax system strongly in the direction of neutrality," the report quoted him as saying.
"It offers strengthening of Australian public finances over the long term, reduces risk of absolute loss for investors, while leaving a substantial share of resource profits in private hands."
Daniel also believes the RSPT won’t cause adverse effects to Australia's economic prospects.
"Consensus forecasts offer evidence that the outlook for business investment has in fact strengthened for Australia in recent months," he said.

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QRC survey predicts $25B capex loss

THE Queensland Resources Council has predicted more than $A25.3 billion of capital expenditure will leave the state and more than 14,000 jobs will be at risk, following its survey of resource companies on the impact of the resources super-profits tax.

Only 30 out of 79 resource companies took part, but 53% of those that responded said their significant future projects were either “highly likely” or “likely” to be under threat because of the tax.
Another 41% revealed they cannot yet determine the impact and just 6% said it was unlikely to threaten their future projects.
Given the size of some of the anonymous companies which did respond, including at least three with 2008-09 turnover of more than $2 billion, QRC is estimating that 10,400 full time construction jobs could be lost, along with 4520 full-time operational jobs.
Fortescue Metals Group and Xstrata have been some of the quickest to shelve projects since the unexpected RSPT announcement in May, but this action might just be the entree to what is to come.
When asked about the possibility of scaling back existing operations because of the tax, 23% of respondent companies said it was “highly likely”, while another 23% said it was likely.
As another sign of the uncertainty which is rife at the moment, 46% said they cannot yet determine whether they will need to scale back or not.
Only 8% could say it was unlikely they would scale back their operations.
On the worst-case scenario of shutting down existing operations, fortunately 44% felt it was unlikely but 40% were undetermined while another 16% said it was likely.
Unsurprisingly, 85% of the respondent companies were confident that debt capital would flow to other countries because Australia is now perceived to have a greater sovereign risk because of the super mining tax.
None of the companies surveyed said the RSPT in its current form would not put constraints on wages.
Just 10% said it could not be determined at this stage while a whopping 90% felt this would happen, with 55% in the “highly likely” category.
Community infrastructure spending plans look set to be thrown out the window with half of the respondents saying this was highly likely to be constrained, 40% saying it was likely and 10% undecided.
Due to the higher local mining wages compared to those in developing nations, it is unsurprising that none of the surveyed companies plan to cut spending on research, development and deployment of technologies.
Industry views
While the federal government often complains about fear-mongering from the big miners, a lot of the small explorers have a lot to lose from the RSPT.
Common themes in the anonymous comment responses in the survey from juniors and explorers centred on new difficulties to capital raising or obtaining finance.
One exploration company with 12 full-time employees argued the tax means fewer deposits will be developed and established mines are less likely to expand or create new ones.
“In addition, companies will selectively mine the high grade to maintain margins and [leave] the medium and low-grade resources unexploited,” the undisclosed explorer said.
“Once the best zones are mined the remaining resource will likely be stranded forever ie [the] exact opposite to what the government has promoted.”
A contracting company which employs about 100 full-time staff can see bust ups in this sector.
“Even if it was to exist in the end, the stalled projects in the period of uncertainty will send a number of contracting companies broke as they continually get pressured for ‘free consulting’, pricing-up projects with no near-term revenue stream,” the contractor said.
A large miner with annual turnover of $2.4 billion in 2008-09 and 1215 full-time workers said the RSPT would impact major long-term contracts with state governments negotiated in 2004 and 2005 and running to 2025 and 2030 respectively.
The company said these deals were negotiated and priced on the basis that only the states would collect resource-rent.
How much tax?
The “super-profits” tax is a not-yet-finalised proposal to tax 40% of the profits made from extracting resources.
Disliking the way the tax is being sold by the government, Deloitte resources tax partner Darren Lee called it an “extraction tax”.
But when adding in existing corporate tax rates, the average effective tax rate expected by the surveyed companies is 58% once the RSPT is introduced in mid 2012.
This compared to an average effective rate of 39% before the RSPT.
A mining company with 2750 full-time equivalent staff said one of the objectives of the Henry review was to make the Australian tax system simpler.
“With several thousand mining operations in Australia and a determination of the taxing point in regard to super tax possibly required for each operation, it is not difficult to conclude that this proposal is unlikely to achieve the objective of simplicity,” the company said in QRC’s survey.
“These snapshot results cover mining, minerals processing, oil and gas production and exploration and say unambiguously that the proposed super-profits tax is taking a crippling toll on future resource projects in Queensland,” QRC chief executive Michael Roche told an audience in Mount Isa today.
“The formula that the federal government is proposing means high levels of tax early in a project, eroding its value and internal rate of return to the developers.
“If project valuations fail to meet a company’s cost of capital and the internal hurdle rate of return, the project usually does not proceed.”

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CCI calls on Gillard to scrap RSPT

BUSINESS groups have wasted no time in the wake of this morning’s change of leadership in Canberra, with the Chamber of Commerce and Industry Western Australia immediately calling on new Prime Minister Julia Gillard this morning to make fundamental changes to Labor’s policy direction.

The call came at the launch of a new economic report on the potential impact of the resources super-profits tax, which the chamber said shows that the tax will cost the WA economy more than $60 billion over the next 10 years.
The first of its kind to examine the effect of the tax on the broader local economy, according to the CCI, the ACIL Tasman report promises there will be a devastating impact on the WA economy if the RSPT is introduced as planned.
The report looks at the impact on the WA economy if major mining projects are cancelled or delayed, as forecast by the mining industry, and at the impact of companies deciding to prioritise overseas projects ahead of those in the state.
According to the CCI, ACIL Tasman found that up to 100,000 potential jobs will be lost over the next 10 years, and economic growth in WA will be slashed.
Economic growth will drop ahead of the actual introduction of the tax, with promised project cuts likely to cut economic growth from 4.25% next year to 1.7% – the equivalent of $4.4 billion and 17,000 jobs, according to the CCI.
CCI chief executive James Pearson said this morning new Prime Minister Julia Gillard needed to make immediate changes to Labor’s policy direction to safeguard the WA, and the broader Australian economy.
He called on Gillard to immediately scrap the RSPT as her first action as prime minister.
“It’s not the person that matters as prime minister, it’s the policies, and what we need in WA is clear,” Pearson said.
“First, scrap the mining tax – a bad idea, very badly sold. Two, take the handbrake off immigration – we need more workers in this state to build the projects and create more jobs, and thirdly, call off the union dogs.
“Industrial relations systems in this country have been skewed too far under this government towards the interests of unions and right now they’re striking right at the heart of our most successful industry, the resources industry.”
At a press conference this morning Gillard showed some significant signs the government may shift ground on the RSPT.
While she refused to outline what changes might be made to the model, and reiterated the previous government's line that miners should pay more tax, Gillard also said she would begin to "negotiate" with the mining industry over the proposed new tax.
She said her government would immediately cancel its advertising campaign over the tax, and called on the mining industry to do the same, as a show of good faith.
"What I am saying, and it's a genuine offer, is the door of this government is open. I am opening that door, and I am asking the mining industry to open its mind," she said.
"I believe that Australians are entitled to a fairer share of the mineral wealth that is in our ground and belongs to all of us.
"We will negotiate through with the mining industry and I do believe there is a consensus emerging that Australians are entitled a fairer share, and that the mining industry can pay more tax," she said.
"Building on that consenses

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BHP cuts anti-tax adverts

MINING heavyweight BHP Billiton has fallen in line with the wishes of Australia’s new Prime Minister Julia Gillard, announcing today that it will cancel its advertising campaign against the resources super-profits tax.

At a press conference this morning Gillard showed some significant signs the government may shift ground on the RSPT, saying she would begin to "negotiate" with the mining industry over the proposed new tax.
She also announced her government would immediately cancel its advertising campaign over the tax, and called on the mining industry to do the same, as a show of good faith.
Today, a BHP spokesperson responded to the new prime minister's request, immediately asking its agencies to suspend all advertising.
“We are encouraged by the comments of new Prime Minister Julia Gillard, that her government will open the doors for negotiation with the objective of achieving consensus,” the spokesperson said.
“The industry has consistently been calling for the government to take the time to properly engage on all aspects of the tax, and we welcome the opportunity to do so.
“We look forward to working with the government in this new way to find a solution that is in the national interest.”
There is speculation that Australia’s mining sector has spent around $100 million on anti-tax advertising, however this figure has been disputed by the Minerals Council of Australia.
MiningNews.net was unable to get comment from Rio Tinto prior to publication.
Meanwhile, Western Australia’s Chamber of Minerals and Energy has also suspended the roll-out of planned advertising and will urgently review existing advertising in the Perth CBD.
CME president Kim Horne said Gillard’s commitment to consultation over the RSPT was a vital step towards ending the uncertainty, which had enveloped the industry and the national economy, since the new tax was announced on May 2.
“The industry has always supported genuine taxation reform, aimed at improving our international competitiveness, growing the industry and providing economic opportunities for all,” Horne said.
“This means putting all parameters of the proposed RSPT up for negotiation.
“We look forward to meeting Gillard and the new ministerial negotiating team as soon as possible.
“This issue needs to be resolved quickly, to end the uncertainty for companies, investors, workers and the wider economy.”
Shares in BHP have gained 72c to $39.86 in afternoon trade.

 

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Legal firm reignites call for flowthrough shares

WHILE the new Minerals Resource Rent Tax has been acknowledged as a step forward in removing investor uncertainty by a professional services firm and a legal group, the removal of additional incentives for juniors has reignited the debate for the introduction of a flowthrough shares scheme.

Lavan Legal partner Tony Chong said the concept of flowthrough shares needed to remain on the government’s agenda, particularly as accumulated losses, by virtue of exploration-related deductions, may not provide the necessary incentive for investments in the junior sector.
While cautiously welcoming the MRRT, Chong said it should be seen for what it is – a new tax.
It said the MRRT did not simplify the tax system, but imposed another layer of compliance.
“Any incentives to assist junior explorers should take into account the fact that many junior companies in the exploration phase do not have any income,” Chong said.
He said two disappointing features of the MRRT were the removal of the exploration rebate and, given that exploration is the life-blood for future resource development in Australia, the lack of additional incentives for junior miners.
“Details of the MRRT still need to be clarified,” he said.
“For example, when working out the assessable profit at the mine gate, can financing costs incurred for costs acquired up to that point be deducted?
“What about infrastructure costs and how does the MRRT work for a company that mines multiple types of ore from the same deposit?”
Chong also questioned whether the removal of the 28% company tax rate proposal would signal any changes to the infrastructure fund that was proposed for Western Australia and Queensland.
“It will also be interesting to see in time whether the MRRT could withstand a constitutional challenge, given that it is clear from the Federal Government’s announcement that the MRRT is designed to tax the value of resources,” Chong added.
“There will no doubt be losers as there are projects that are currently exempted which would be taxed under the new announcements, such as the North West Shelf project.
“However, depending on the final tax design, the use of market value as a starting base could potentially have the effect of deferring the starting time for when tax would be ultimately payable for a project.”
In terms of the PRRT, he said serious consideration should be given as to whether the overall PRRT system be modified to reduce the disincentives to develop the oil and gas sectors further, and to provide greater international competitiveness against key market players in Qatar.
Deloitte has also welcomed the Federal Government’s revamp of the resource super-profits tax, but cautioned that junior miners and explorers, and also those with marginal projects, would no longer benefit from any royalty refunds or underwriting of losses, signalling a revaluation of their models for the coming year.
Mining tax partner Gordon Thring said while there is a lot of detail still to be worked out, the new proposal will likely remove the uncertainty for investment decisions and exploration.
“M&A activity should now be more viable, as this move by the government should alleviate some of the concerns about the longer-term impact on investment by overseas interests,” he said.
“There are particular groups that will be looking for more clarification, including the onshore oil and gas sector caught under the petroleum resource rent tax, which differs significantly to the proposed MRRT.”
The government is expecting that more than 85% of mining companies previously caught under the resources super-profits tax will now be excluded from the new regime.
“This will be particularly beneficial for industries such as nickel and alumina, where significant processing and refining caused difficulties with the taxing point,” Thring said.
“There will still be a lot of complexity in the MRRT but with the removal of industries such as nickel, copper and alumina, which have extensive refining involved, lessens issues with the taxing point, it will still be an area of debate.”

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Abbott may speak to miners

OPPOSITION Leader Tony Abbott says he may speak with disgruntled junior miners over the Gillard government’s Minerals Resource Rent Tax in Perth today.

Speaking on Fairfax Radio this morning, Abbott said that he had no scheduled meetings with any miners during his visit to Perth.
"Look, I don't have any meetings scheduled, but I wouldn't be surprised if I do end up talking to some of them in the course of the day," Abbott said during the interview.
"Certainly, I have met with them on my last visit to Perth, and have had contact with them as you'd expect because all that stands between Western Australia and an investment destroying and a job-destroying new tax is the coalition.
"We are the last line of defence against this assault on the prosperity of Western Australia."
The MRRT has received strong opposition from WA-based mid-tier and junior miners as well as mining industry groups including the Association of Mining and Exploration Companies.
Today’s news comes after Fortescue Metals Group chief executive Andrew Forrest along with AMEC chief executive Simon Bennison and BC Iron chief executive Mike Young renewed calls for an advertising campaign opposing the Gillard government’s proposed tax.

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