-
AFLW 2024 - Round 10 - Chat, game threads, injury lists, team lineups and more.
Twiggy sticks a great big log up Rudd
- Thread starter GuruJane
- Start date
- Tagged users None
Grin, you know that the SA and QLD Governments are against this tax as well, right?
That's obviously a fair point.
But the mining industry has a history of crying wolf.
The question is, I guess: Is there really a wolf this time?
There is a wolf, just not as big as they're claiming.
The structure of this tax isnt viable - Henry himself has allegedly said that if the financiers don't value the covering of potential losses, then it doesn't work; and the financiers have said that it is useless.
There is zero logic behind a 6% threshold; using the bond rate is just flat out ******ed - do they want investment and growth, or do they want people putting their money in bonds/banks for a 6% return? Also doesn't take into account the equity risk premium, so the 6% rate isn't 'real.'
It needs to be at least 12%, and it should be around 15%.
The 40% take is also too high, especially on existing operations where the deductions and write-offs have been expended years ago.
If it was a 15% threshold with a 25% take, there would be nowhere near as much concern over it.
The structure of this tax isnt viable - Henry himself has allegedly said that if the financiers don't value the covering of potential losses, then it doesn't work; and the financiers have said that it is useless.
There is zero logic behind a 6% threshold; using the bond rate is just flat out ******ed - do they want investment and growth, or do they want people putting their money in bonds/banks for a 6% return? Also doesn't take into account the equity risk premium, so the 6% rate isn't 'real.'
It needs to be at least 12%, and it should be around 15%.
The 40% take is also too high, especially on existing operations where the deductions and write-offs have been expended years ago.
If it was a 15% threshold with a 25% take, there would be nowhere near as much concern over it.
But the return isn't capped at 6%. A larger proportion of tax is paid above 6%
- May 5, 2006
- 62,814
- 70,176
- AFL Club
- West Coast
Why the need for double taxing? Why the need for the government to decide what is a profit and what is a 'super profit'?
If royalties then tax is so bad (I don't think it is), why not really make it 'simpler and fairer' and exempt resource companies from corporate tax and tax them at 40% or some other nominal figure?
If royalties then tax is so bad (I don't think it is), why not really make it 'simpler and fairer' and exempt resource companies from corporate tax and tax them at 40% or some other nominal figure?
- Thread starter
- #608
Pazza. Again:
- can you tell me how this works, or provide a link that explains it?
for eg - are state royalties all abolished the moment the tax comes into effect?
Do the states get compensated for loss of revenue from the super tax?
And if so, has this been already allocated in the forward projections?
Do the states all have to give their consent to forgoing their royalties?
Learn to read. That was the Australian reporting on the comments of a top rated mining analyst at one of the big investment houses. You know the ones that advise people where to put their money. Guess what, they are telling them to steer clear of Australia and stating that the expansion of Olympic Dam is not viable under the new tax.
How about that bet.
When I ask the mining industry to put their money where their mouth is and hand back the leases in which they claim that they will not be able to invest, you right wing fanboys respond with volumes of personal abuse.
When I challenge you for, just a token bet you ignore it.
You know perfectly well that the resources industry will not collapse because of this tax. You are just pushing anti Labor propaganda even though you understand, as perfectly clearly as me, that it is not in Australia's interests.
If you think these poor billionaires are so badly done by, give them a donation. Don't expect Australia to prostitute it's future so that poor Twiggy can buy a second fleet of private Jets, just because he claims that, after doing very well from Australia, we all owe him.
I'm still waiting for the likes of you to provide me with the evidence that the resources sector collapsed after work choices was wound back, like they said would happen.
They must piss themselves that Liberal party stooges just keep believing their predictions of doom time and again. You'd reckon you'd learn after being tricked by their lies a few times before.
When I ask the mining industry to put their money where their mouth is and hand back the leases in which they claim that they will not be able to invest, you right wing fanboys respond with volumes of personal abuse.
When I challenge you for, just a token bet you ignore it.
You know perfectly well that the resources industry will not collapse because of this tax. You are just pushing anti Labor propaganda even though you understand, as perfectly clearly as me, that it is not in Australia's interests.
If you think these poor billionaires are so badly done by, give them a donation. Don't expect Australia to prostitute it's future so that poor Twiggy can buy a second fleet of private Jets, just because he claims that, after doing very well from Australia, we all owe him.
I'm still waiting for the likes of you to provide me with the evidence that the resources sector collapsed after work choices was wound back, like they said would happen.
They must piss themselves that Liberal party stooges just keep believing their predictions of doom time and again. You'd reckon you'd learn after being tricked by their lies a few times before.
- Thread starter
- #611
Haven't you noticed - the currency on BF betting has been seriously devalued by Dippers. FOS.
What bet, set out the terms so we can see it clearly.
The industry wont collapse, but expansion of it will slow rapidly, just like it did after the petroleum RSPT was introduced; which was a hell of a lot less punitive than this one.
And stop framing the issue as Twiggy being the centrepiece; what about the huge number of Australians who work directly in the mining industry, and indirectly around it?
More on Olympic Dam.
Stephen Bartholomeusz
Olympic Dam's vanishing value
www.businessspectator.com.au/bs.nsf/Article/Olympic-Dam-BHP-Kevin-Rudd-
RSPT-pd20100616-6G93C?OpenDocument&src=sph
Morgan Stanley’s analysis of the implications of the resource super profits tax for BHP Billiton’s proposed $US20 billion-plus expansion of its Olympic Dam project should be required reading for all the members of the Rudd government cabinet because it shows how the tax would kill off one of the largest resource developments in modern Australian history.
BHP has been studying the feasibility of the expansion, which would create one of the largest open-cut mines in the globe, producing nearly four times the volume of copper and uranium that it does today and employing about 9000 people in the construction phase and 4000 once it became operational.
The Morgan Stanley analysis assumes the mine starts production in 2018 and its production reaches maturity around the middle of the next decade.
Once operational, Olympic Dam would generate up to $US5.5 billion of revenue a year and under the current taxation regime would pay about $US900 million a year in taxes and royalties – an effective tax rate of more than 36 per cent.
Under the same regime, once fully up to speed, it would, Morgan Stanley’s analysts say, produce profits of about $US1.7 billion a year, or a return on invested capital (ROIC) that would climb to around 20 per cent.
That provides an indication of the levels of capital, export revenues, jobs, lead times and returns involved in a project of the magnitude and risk of Olympic Dam – the last great mineral find in this country. (It was discovered in the late 1970s but it took 12 years before first production).
Morgan Stanley’s base valuation of the project under the current settings, using an 8 per cent weighted average cost of capital, is $US690 million. That means it would take 12 years to recover the initial capital invested. During that period the mine would generate taxes and royalties of $US9.7 billion.
So, under the current tax regime, with a solidly positive net present value (NPV), the project probably goes ahead – provided there aren’t higher risk-adjusted returns available elsewhere and BHP’s board is prepared to put such a large lump of capital into a single and quite complex project.
With the RSPT in its present form, the NPV of Olympic Dam is a negative $US761 million! That’s with the expansion completely equity funded – the numbers would be worse if there were any debt funding because the RSPT applies before financing costs.
While the project would produce a ROIC of 14.6 per cent under the RSPT, it is almost inconceivable that BHP would proceed with a project that destroyed shareholder value to that extent and which would ultimately face an effective tax rate above 70 per cent. That’s not what one might regard as a fair sharing of the risk and reward of such a major investment of shareholder funds.
Morgan Stanley modelled the impact of a 40 per cent RSPT with an uplift factor of 10 per cent rather than the government bond rate now proposed. That produced a positive NPV of $US85 million.
While it said it believed the project would be developed under those fiscal conditions, one wonders where Olympic Dam would rank under those settings amidst the universe of potential projects within BHP’s vast development pipeline.
As a base metals project with complex mineralisation it is inherently riskier than, say, iron ore or metallurgical coal, where at least Australian producers have some degree of influence over the market and where prices tend not to be quite so volatile because of the relative concentration of the supply base.
The analysts said their analysis showed that, at a minimum, the RSPT required some key adjustments in order for Olympic Dam to be economic and investment to proceed.
The headline tax rate needed to be reduced – 20 per cent was more appropriate than 40 per cent – and the uplift factor needed to be lifted from 6 per cent to a minimum of 10 per cent and be more reflective of the weighted cost of capital.
With a 20 per cent RSPT and 6 per cent uplift factor Olympic Dam would have a NPV of $US132 million, a payback period of 12 years and an average ROIC of 16.9 per cent. It would pay $US9.2 billion of taxes and royalties in its first 12 years of production – about $US500 million less than under the current regime but which would represent, by the middle of next decade, an effective tax rate of about 44 per cent.
The analysts actually think the super profit threshold should be set at 15 per cent because this was more reflective of the typical hurdle rate required for high-risk investment by miners and fund managers. The Morgan Stanley team also says that, for existing mines, assets should be revalued to market or replacement value (which would do away with the retrospective dimension of the tax).
So, under the existing tax regime, the expansion would generate almost $US10 billion of taxes and royalties for the government. Under the RSPT as currently proposed – nothing.
There would be no tax on super profits because there would be no profits, or investment. That would be an odd outcome if the tax were, as Kevin Rudd keeps claiming, truly an historic "reform".
Stephen Bartholomeusz
Olympic Dam's vanishing value
www.businessspectator.com.au/bs.nsf/Article/Olympic-Dam-BHP-Kevin-Rudd-
RSPT-pd20100616-6G93C?OpenDocument&src=sph
Morgan Stanley’s analysis of the implications of the resource super profits tax for BHP Billiton’s proposed $US20 billion-plus expansion of its Olympic Dam project should be required reading for all the members of the Rudd government cabinet because it shows how the tax would kill off one of the largest resource developments in modern Australian history.
BHP has been studying the feasibility of the expansion, which would create one of the largest open-cut mines in the globe, producing nearly four times the volume of copper and uranium that it does today and employing about 9000 people in the construction phase and 4000 once it became operational.
The Morgan Stanley analysis assumes the mine starts production in 2018 and its production reaches maturity around the middle of the next decade.
Once operational, Olympic Dam would generate up to $US5.5 billion of revenue a year and under the current taxation regime would pay about $US900 million a year in taxes and royalties – an effective tax rate of more than 36 per cent.
Under the same regime, once fully up to speed, it would, Morgan Stanley’s analysts say, produce profits of about $US1.7 billion a year, or a return on invested capital (ROIC) that would climb to around 20 per cent.
That provides an indication of the levels of capital, export revenues, jobs, lead times and returns involved in a project of the magnitude and risk of Olympic Dam – the last great mineral find in this country. (It was discovered in the late 1970s but it took 12 years before first production).
Morgan Stanley’s base valuation of the project under the current settings, using an 8 per cent weighted average cost of capital, is $US690 million. That means it would take 12 years to recover the initial capital invested. During that period the mine would generate taxes and royalties of $US9.7 billion.
So, under the current tax regime, with a solidly positive net present value (NPV), the project probably goes ahead – provided there aren’t higher risk-adjusted returns available elsewhere and BHP’s board is prepared to put such a large lump of capital into a single and quite complex project.
With the RSPT in its present form, the NPV of Olympic Dam is a negative $US761 million! That’s with the expansion completely equity funded – the numbers would be worse if there were any debt funding because the RSPT applies before financing costs.
While the project would produce a ROIC of 14.6 per cent under the RSPT, it is almost inconceivable that BHP would proceed with a project that destroyed shareholder value to that extent and which would ultimately face an effective tax rate above 70 per cent. That’s not what one might regard as a fair sharing of the risk and reward of such a major investment of shareholder funds.
Morgan Stanley modelled the impact of a 40 per cent RSPT with an uplift factor of 10 per cent rather than the government bond rate now proposed. That produced a positive NPV of $US85 million.
While it said it believed the project would be developed under those fiscal conditions, one wonders where Olympic Dam would rank under those settings amidst the universe of potential projects within BHP’s vast development pipeline.
As a base metals project with complex mineralisation it is inherently riskier than, say, iron ore or metallurgical coal, where at least Australian producers have some degree of influence over the market and where prices tend not to be quite so volatile because of the relative concentration of the supply base.
The analysts said their analysis showed that, at a minimum, the RSPT required some key adjustments in order for Olympic Dam to be economic and investment to proceed.
The headline tax rate needed to be reduced – 20 per cent was more appropriate than 40 per cent – and the uplift factor needed to be lifted from 6 per cent to a minimum of 10 per cent and be more reflective of the weighted cost of capital.
With a 20 per cent RSPT and 6 per cent uplift factor Olympic Dam would have a NPV of $US132 million, a payback period of 12 years and an average ROIC of 16.9 per cent. It would pay $US9.2 billion of taxes and royalties in its first 12 years of production – about $US500 million less than under the current regime but which would represent, by the middle of next decade, an effective tax rate of about 44 per cent.
The analysts actually think the super profit threshold should be set at 15 per cent because this was more reflective of the typical hurdle rate required for high-risk investment by miners and fund managers. The Morgan Stanley team also says that, for existing mines, assets should be revalued to market or replacement value (which would do away with the retrospective dimension of the tax).
So, under the existing tax regime, the expansion would generate almost $US10 billion of taxes and royalties for the government. Under the RSPT as currently proposed – nothing.
There would be no tax on super profits because there would be no profits, or investment. That would be an odd outcome if the tax were, as Kevin Rudd keeps claiming, truly an historic "reform".
- Banned
- #615
So you're not even going to say it will shrink. Just grow slower.
That sounds like the perfect outcome for the country. Mining remains strong, but not a gravy train for billionaires, and Australia reaps the benefits of its resouces..... and we keep them in store for the next big economic downturn.
IMO, the perfect way for Australia to play its mining is to keep it humming along at a level where it doesnt skew the economy, but can be ramped up when times are tough in other areas.. We are still primarily a services based economy, and that should remain so.
And how will you balance the current account or do you expect the Australian public to go without their imported goodies.
- Banned
- #617
That sounds like one of your misguided predictions again.
I'd be fascinated to see what wild assumptions you came to to draw that conclusion ?
- Banned
- #618
So your view is that we should slow down the sector responsible for 70% of our exports?
You do realize that the boom is based on external factors I.e demand, and that demand will be filled from somewhere? Currently, we get premium prices because we can supply and because other projects aren't ready yet.
At present there is massive activity all over the world to get new projects on line and if we make our industry less attractive then increasingly those new projects will be elsewhere. This is not a tap we can turn on when times are tough (FFS, do you know anything at all about mining?).
By the way, when we slow the sector most responsible for our exports and our wealth creation, what happens to our current account? What impacts does that have on everyone? How many service business' will there be in 10 years when we have deliberately damaged the one sector that gives us an advantage over the majority of other OECD countries?
By store, you mean in the ground, where they are worthless?
What happens if renewable energy becomes viable in the next 5-10 years and the demand for coal dies in the arse? Or minerals that we currently mine can be synthesised in 15 years time?
Not only that but as Access Economics and others have poined out real prices for commodities have been in decline for a very long time and will most likely resume this trend.
The leave it in the ground argument is ridiculous.
Are you aware of the growth in demand for coal in China and India? Are you aware the Indonesia will stop exporting coal (if not already) to keep up with internal demands? These 3 huge populations are relying on coal for their growth. This is not something that just switches off in 5 years.
Where are these huge coal alternatives that everyone is claiming is a feasible alternative to Australia? That can meet those economies demands?
And what about iron?
If you really think that Australia will be alone in demanding more from these companies then I think you're in dreamland.
Yet at the same time new deposits are being found it West Africa.
For some amazing reason people think that even if the Mining Companies can't make a reasonable profit (something more that 1-2% above the bond rate) that someone else will swoop in to replace them.
Apparently people just line up to spend money a risky projects that barely scrap in more then the bond rate (if that). Even when there are far more profitable mining ventures with similiar risk profiles (thanks Rudd) but far higher rates of return.
- Banned
- #623
Wrong, on so many levels.
I take it you've read the Access Economics report? Perhaps you could give us your considered critique of it.
Similar threads
