"Super" Mining Tax

[Gozu]

Well that is just a straight out lie. Universally? Are you kidding? As I stated at the beginning of this thread, I do not automatically sit on either side of the political fence. I use my brain. It is obvious that you have a dogmatic, almost religious, passion for the ALP. And yes, I have voted for them in the past too. I just don't see sense in this policy.

I wouldn't get too cute if I were you. You've got an agenda and it's clear for everyone to see. Remember you were the guy who claimed on page one you don't think this is a scare campaign from the big mining companies. I've shown in this thread the kind of crap and lies they throw out there throughout history whenever they think their extraordinary profits might be touched by anyone. We all remember how they said getting rid of WorkChoices would destroy the mining industry and saw the work their lobbyists did to the Government's CPRS.

Just about any country in the world would swap their financial situations for ours, you know this. Australia's economy while small relatively speaking is now lauded the world over as is our stimulus spending which helped to save a lot of people's jobs. I'll take the word of the IMF and respected economists around the world over some partisan commenter on a forum. No, you showed your true colours when you made that comment earlier in the thread about pining for the days when the Liberal Party get back into government and you'd do well to do a bit of reading on here before shooting your mouth off about me supposedly being a passionate supporter of the ALP. I rarely vote for them and in fact preferenced the Libs ahead of them in the recent state election. I know you don't see the sense in this policy but just about everyone else does.

My point is that mining companies are already paying government for the privilege of extracting and processing Australia's mineral resources.

Clearly they haven't been paying enough (as per The Age article) hence the RSPT and why you felt so passionately the need to start this thread.

Once again, this would be a non-sustainable tax if it remains as it has been reported.
Commodity prices fall again globally = end of boom. The Australian government is insignificant on the world business stage. It cannot influence supply and demand or commodity prices. Simple as that.

Prove it? I'm almost certain your definition of "non-sustainable" would be different to most. Why are economists and a former head of the Minerals Council backing this then and have never said this won't be sustainable?

[Gozu]

Thank you Liberal Party Member for Mayo, Jamie Briggs:

South Australia stands at the edge of a potential golden era, a golden era of opportunity like the state has never seen before.

It turns out that South Australia sits on a giant bed of yellow cake that, if managed properly, will drive the state for generations. As China and India continue to grow at nearly 10% per year with no sign of stopping soon, their insatiable appetite for energy resources grows along with it.

For instance between now and 2050 China will require an additional terawatt of power just to sustain their current levels of growth. Given the desire to build emission free power plants, uranium is in high demand as a fuel of choice around the world particularly amongst developing countries.

This puts South Australia in the box seat. Australia has approximately 23% of known world resources with a large portion of those located in South Australia.

BHP is planning and currently undertaking an environment impact statement on a massive expansion that will make the Olympic Dam ore body one of the most bountiful in human history.

It is estimated to have one trillion dollars worth of resources.

The revenue and job potential of this massive investment by BHP is hard to comprehend.

In the start up faze alone there will be 13,000 jobs created and when the mine gets up and running it will increase net exports from South Australia over the next 30 years by over $16 billion compared to business as usual.

http://www.liberal.org.au/Latest-News/B ... Punch.aspx

[purch]

Even Swan's own, hand-picked panel now urges re-think:

http://www.theaustralian.com.au/news/wayne-swans-mining-tax-consultation-panel-urges-rethink-on-failed-project-refund/story-e6frg6n6-1225870297792

[Gozu]

I agree with most of what the SMH's Economics Editor says in this article, "Shonky advisers have led Rudd badly astray":

And this lucrative tax came with the economic rationalists' Good Policy seal of approval, co-signed by Dr Ken Henry and Professor Ross Garnaut. Economic imprimaturs don't come from any higher authority.

One small problem: the resource tax is so pure - so carefully designed to ensure it doesn't do all the bad things it's being accused of - that it's impossible for anyone who's not a paid-up economist to understand.

http://www.smh.com.au/business/shonky-a ... -w41x.html

[Gozu]

"Miners should spend $200m on campaign but be open about it":

It was good to see David Marr extract an admission on Insiders yesterday from Gerard Henderson that his Sydney Institute does get some funding from a mining company hit by the proposed super profits tax.

While BHP-Billiton is 40% Australian-owned, only four of the 12 directors are from Australia and still live here.

Rio Tinto is even worse with Australian ownership down to about 15% and only three of the 15 directors living here. Wednesday’s Australian leg of the 2010 AGM in Melbourne will be a cracker.

The best-known Australian mining face is Andrew Forrest but he put on a very ordinary display with Alan Kohler on Inside Business yesterday, reverting to hyperbole that was almost as bad as Clive Palmer.

The 2010 BRW Rich List is due out this week and as James Thomson pointed out on Business Spectator, Twiggy is expected to enjoy the largest increase, up from $2.4 billion to an estimated $4.4 billion.

Hmmm. Perhaps Alan Kohler should have mentioned a couple of these things yesterday.

http://www.crikey.com.au/2010/05/24/min ... -about-it/

[purch]

Thank you Liberal Party Member for Mayo, Jamie Briggs:

South Australia stands at the edge of a potential golden era, a golden era of opportunity like the state has never seen before.

It turns out that South Australia sits on a giant bed of yellow cake that, if managed properly, will drive the state for generations. As China and India continue to grow at nearly 10% per year with no sign of stopping soon, their insatiable appetite for energy resources grows along with it.

For instance between now and 2050 China will require an additional terawatt of power just to sustain their current levels of growth. Given the desire to build emission free power plants, uranium is in high demand as a fuel of choice around the world particularly amongst developing countries.

This puts South Australia in the box seat. Australia has approximately 23% of known world resources with a large portion of those located in South Australia.

BHP is planning and currently undertaking an environment impact statement on a massive expansion that will make the Olympic Dam ore body one of the most bountiful in human history.

It is estimated to have one trillion dollars worth of resources.

The revenue and job potential of this massive investment by BHP is hard to comprehend.

In the start up faze alone there will be 13,000 jobs created and when the mine gets up and running it will increase net exports from South Australia over the next 30 years by over $16 billion compared to business as usual.

http://www.liberal.org.au/Latest-News/B ... Punch.aspx

Notice that article is dated 4 February, before announcement on the govt's new tax. After more than 20 years of production the Olympic Dam mine has still not "paid for itself". It is a currently a high-cost per tonne underground operation. More has been spent on it than earned. What's more is that right now they are losing big bucks due to a recent skip failure in the primary shaft.

http://www.miningaustralia.com.au/news/olympic-dam-shaft-accident-proving-costly

[purch]

From http://www.crikey.com.au/2010/05/25/ask-the-economists-what-impact-will-the-rspt-have-on-the-australian-economy/

Ask the Economists: What impact will the RSPT have on the Australian economy?

Kevin Rudd isn’t winning any popularity contests of late and his Resources Super Profits Tax (RSPT) might not be helping the cause. According to the RSPT announcement document, the RSPT will force mining companies to pay 40% of their profits to “ensure the community receives a more consistent share in the returns of Australia’s non-renewable resources”. The tax has attracted criticism from the opposition, with Tony Abbott promising to rescind the tax should the coalition return to government later this year.

Since the government announced the RSPT, several large mining companies have ramped up the rhetoric about putting their Australian projects on hold. Rio Tinto’s proposed $11 billion venture into Western Australia’s Pilbara region has apparently been shelved with Fortescue also putting two major expansion projects on hold while details of the tax are fleshed out.

Debate about the tax continues to play out in the media,while voters are left scratching their heads and presumably to the surprise of the government, taxing the big old rich mining companies hasn’t given them any traction in the polls.

To cut through the confused commentary and politics of the RSPT, Crikey boiled it all down to a simple question for four of Australia’s leading economists:

“In your opinion, what impact will the new Resources Super Profits Tax have on the Australian economy?”

Stephen Walters, chief economist, JP Morgan: The debate over the RSPT already is having an impact on the Australian economy and financial markets, including the value of the Australian dollar. The extent of the “damage” is hard to quantify, with the truth somewhere between the two extreme positions currently being debated — the government’s assertion that the new tax will boost investment, and the mining industry’s position that the tax will destroy Australia’s golden goose.

Some mining investment already has been affected, which may cost jobs, partly because the real world of investment decision-making does not always correspond with what happens in theory. Indeed, despite what the economics tells us, in the real world of risky mining investment and a finite supply of capital, not all positive net present value (NPV) projects get approved and, more importantly, funded.

As far as international investors are concerned, the government’s announcement of the new tax has added to the weakness in the Aussie dollar, albeit at the margin, because it changed the risk parameters associated with investing in Australia. Many global investors trade the market first, and ask questions later. The lingering uncertainty over the structure of the tax, and the sometimes shrill tone of those making the opposing arguments, is only making things worse.

Shane Oliver, chief economist, AMP Capital Investors: Taking the Resources tax together with the other announcements around the Henry review and the Budget — notably the cut to the company tax rate and measures to further boost savings — I think the whole package should be positive for Australia over the longer term.

However, I am not in a position to assess the competing claims of the mining sector and the Government regarding the impact of the tax but in the interest of ensuring that we don’t damage the prospects for the Australian resources sector over the long term, and foreign investors’ perceptions of Australia as a reliable low risk and competitive global provider of commodities, I think there is a case for both sides to compromise on the tax. This is particularly the case given the continuing uncertainty regarding the global economic outlook and the role the resources sector has played and can play going forward, in providing a bit of a buffer for the Australian economy.

Steve Keen, Associate Professor of Economics and Finance, University of Western Sydney: Firstly, the definition of super profits in the announcement document is an example of how utterly naive conventional “neoclassical” economic theory is about real industry, and how much damage neoclassical economists can do when they are allowed to fiddle with the real world. They imagine that marginal costs of production exceed average costs: that the last tonne of ore extracted costs more to mine than the previous tonnes.

Yet almost 200 empirical studies have shown that this isn’t true: for over 90% of industries, average costs exceed marginal costs. Neoclassical economists ignore this empirical fact because it would stuff up their textbook theories — in fact, most of them don’t know this empirical fact, even though the data is readily available Marginal cost pricing would send most companies bankrupt.

Though I support the concept of a tax to capture some of the earnings from mining for the Australian public, this is a naive, neoclassical notion that can clearly do more harm than good.

Secondly, I agree with Malcolm Fraser’s comments on last night’s Q & A that the real debate should be about securing more of the value added from our mineral resources — a debate that did occur some decades ago but has now died out.

Thirty years ago, the then Gina Hancock ran an ad in The National Times for her father’s 65th birthday which had the lines: “There’s nothing wrong with Australia. There’s plenty of wealth in this country. All it takes is people with the guts and imagination to dig it up and sell it.” Sadly, that “wealth is a hole in the ground” attitude won out over developing Australian industry, and the best we can now do is debate how much we should tax the profits from mining.

Dr Ron Woods of http://www.roneconomics.com.au, independent funds manager: Whatever the merits or demerits of RSPT the timing of it is wrong. Whether real or imagined, the announcement has drawn undue negative attention onto Australia at a time when markets are especially skittish about any change in the sovereign risk of various countries. Thus this is likely to cause some negative assessments of the economy’s prospects and as these tend to become self-fulfilling it is likely to be a drag on the economy.

[purch]

From http://www.businessspectator.com.au/bs.nsf/Article/Report-author-questions-govt-use-of-tax-figures-re-pd20100525-5S5WA?opendocument&src=rss

Report co-author questions govt use of tax figures: report

The statistics at the heart of the federal government's push to implement its proposed resources super profits tax (RSPT) may have been based on as few as four Australian companies, according to The Australian newspaper.

One of the university students who co-wrote the paper, Kevin S. Markle, told the newspaper that the small sample size meant the final figures were dumped from the report.

Mr Markle said that quoting the report, as if it delivered some precise measurement, was not the right thing to do, as only countries where more than 20 companies were researched were kept in an updated version of the paper.

“Our paper has nothing to do with what it is being used for in this debate.," Mr Markle told The Australian. "Our question was does (tax) domicile still matter.”

The government has come under heavy fire for the use of the report, with BHP saying the company was concerned that "inappropriate conclusions" had been drawn.

Federal Treasurer Wayne Swan has said the analysis proved miners were ripping off ordinary workers.

Opposition finance spokesman Andrew Robb said the government was using "amateur hour" research from the US to suggest multinationals pay company tax of just 13 cents in the dollar.

Mr Robb said the treasurer should apologise for "denigrating the icons of Australian industry solely on the basis of an academic paper by a graduate student from North Carolina".

[Gozu]

"Economics 101 on the rise on the rise and fall of the Aussie dollar":

All tried to use the fall in the dollar late last week as evidence “the market” had (somewhat belatedly) decided it didn’t like the RSPT. No, it’s not the tax debate, nor is it it a “raid” or “capital strike”, as one impressionable online columnist would have us believe.

The claim that the Aussie dollar is somehow a floating indicator of the economic rationality of the Australian government is a fairy story for small minds and insular politicians trying to score points against their opponents.

Here are some facts for the coalition and their commentariat mates to chew on:

The Australian dollar is a global proxy for risk: when fears about risk are low or falling, the Aussie dollar rises because the US dollar is usually weak and commodity prices are rising.

The Aussie is the world’s sixth most traded currency, while we are about the 20th largest economy. In other words, the Aussie is more important globally than the size of our economy would indicate.

There is a plentiful supply of US dollars here because of our strong resource exports (all of which are priced in US dollars), so it makes us an easy play when confidence about the global economy, and especially China, is high.
The forex market here and in Europe and the US (and Asia) in Aussie dollars is liquid and easy to enter and leave.

So did the RSPT undermine the dollar? For a day or two it probably was a marginal contributor, but the story had been well leaked for more than a month before it was announced.

And here’s what the likes of Hockey won’t mention: BHP, Rio and Fortescue, not to mention a host of smaller companies (especially gold miners), have benefited from the drop in the dollar from just over 93 US cents a month ago to just under 83 cents this morning.

In fact, companies such as BHP and Rio Tinto (which report in US dollars, but pay dividends, tax, etc, here and wages in Australian dollars) have made nice gains.

If we were as as excitable as some columnists and believed the idea that the tax debate has driven the dollar lower, then you could argue that BHP and Rio Tinto (plus Twiggy Forrest, from Fortescue) have been “talking the dollar down” for gain and have had a vested interest in continuing to do so.

And that Joe Hockey, Tony Abbott and Andrew Robb have been assisting them. But on recent form, you’d wonder if the three blind mice had the wit or cleverness for that.

http://www.crikey.com.au/2010/05/25/eco ... ie-dollar/

[Gozu]

Notice that article is dated 4 February, before announcement on the govt's new tax. After more than 20 years of production the Olympic Dam mine has still not "paid for itself". It is a currently a high-cost per tonne underground operation. More has been spent on it than earned. What's more is that right now they are losing big bucks due to a recent skip failure in the primary shaft.

http://www.miningaustralia.com.au/news/olympic-dam-shaft-accident-proving-costly

The date was irrelevant to the point I was making. Olympic Dam hasn't paid for itself? Have you got any independent links to that? There's supposedly a Trillion dollars worth of resources in there so it will soon enough be doing a bit more than paying for itself and I've been following the mine shaft debacle closely in The Independent Weekly and I'm sorry you can't use a mining company's incompetence as an excuse for it not making more money than it already is. A bit like saying BP would be doing better if not for their oil spill disaster in the US.

[purch]

You might find this enlightening Gozu. From http://www.businessspectator.com.au/bs.nsf/Article/RSPT-resource-super-profits-tax-mining-Fortescue-R-pd20100525-5S9NH?OpenDocument

Rudd's resource catch-22 5:04 PM, 25 May 2010

Herb Elliott’s impassioned letter to Fortescue Metals shareholders highlights the Catch-22 effect of the Rudd Government’s proposed resource super profits tax on smaller resource groups.

As discussed previously (What really made Twiggy snap) Fortescue would be peculiarly, among the larger miners, affected by the RSPT. That's because it is unusually leveraged, with high-yield debt. With the RSPT applying before financing costs, its profitability would be decimated.

It used to be the case that the Fortescue strategy of using project financing to develop a new project was the norm for small to medium-sized resource companies without the balance sheets and diversity of cash flows of a BHP Billiton or a Rio Tinto to raise borrowings against their overall balance sheet.

That’s changed somewhat during the first phase of the most recent commodity boom because equity for new projects has become far more accessible.

Elliott, Fortescue’s chairman, raises an interesting issue in his letter to shareholders.

As he says, the cornerstone of the RSPT is the concept of the government becoming a "silent partner" by matching the 40 per cent "take" of the RSPT (before normal corporate taxes) with a promise to refund 40 per cent of any losses if a project fails. In effect, instead of owning 100 per cent of a project, the miner owns 60 per cent of it and an IOU from the government, redeemable if the project fails and paying interest at the risk-free rate of less than 6 per cent, in lieu of the other 40 per cent.

"Who believes that companies could fund 40 per cent of an investment on the strength of some future unbudgeted government tax credit after it failed? No bank wants to fund a failed project on the premise that 40 per cent can subsequently, perhaps, be reclaimed through tax," Elliott said.

An example. What if BHP decided to go ahead with its $20 billion-plus expansion of Olympic Dam, a relatively high-risk investment? What if, in a decade’s time, copper prices dived and rendered the project uneconomic to the point where it had to be shut down?

Would a future government – perhaps one struggling with its debt and deficits because the commodity boom that, with the help of the RSPT, had inflated its revenues and spending had ended with a bang, in the process wiping out Olympic Dam and dozens, if not hundreds of other mines, including the marginal production the government expects the RSPT to encourage – be prepared or even able to write a cheque for, say, more than $14 billion to a global company? Along with the billions of dollars of cheques to other miners big and small, domestic and foreign?

You wouldn’t bank on it and certainly not without a risk premium. No banker is going to lend against the full value of that 40 per cent, let alone at the risk-free rate assumed by the government and its Treasury boffins.

So, a miner won’t be able to get project financed and its ability to borrow against the government’s IOU will be discounted by the perceived sovereign risk. Equity has to be the solution, doesn’t it?

Except that equity returns are going to be heavily and adversely impacted by the RSPT. Even if the state government royalties are going to be rebated (although not any increases once the tax is in place), 40 per cent of the gross profits, after allowing a return equivalent to the risk-free rate, are going to be diverted to the government.

For a BHP, that increases the effective tax rate from about 43 per cent to 55 per cent. For a Fortescue, because of its balance sheet structure, the effective tax rate might be closer to 80 per cent. To the extent that equity can be attracted, it will be a lot more expensive than it is today.

So, debt will be less available and more expensive under an RSPT regime and equity less available and more accessible – in a sector which competes for capital and customers on a global basis. Hmm, what might the national interest implications of that be?

The RSPT is a highly complex piece of theory – modified further by Ken Henry’s review panel to replace cash rebates with IOUs – that has been around for more than 60 years, but not adopted anywhere despite the appeal of the notion that under-pins it; of partly nationalising a nation’s resources.

The government’s arguments in favour of it are being discredited on a daily basis as its reliance on shonky stats and the real-world impacts of the theory are exposed.

The fact that the government proposes to use the proceeds of what might be, if sustained, a once-in-a-generation windfall for recurrent spending so that it can pretend fiscal responsibility while going on a pre-election recurrent spending spree makes it even worse – the windfall isn’t being stored away in a sovereign wealth fund for future generations as, and when, the national resource base is depleted.

[Gozu]

You might find this enlightening Gozu. From http://www.businessspectator.com.au/bs.nsf/Article/RSPT-resource-super-profits-tax-mining-Fortescue-R-pd20100525-5S9NH?OpenDocument

[i]Rudd's resource catch-22 5:04 PM, 25 May 2010

Herb Elliott’s impassioned letter to Fortescue Metals shareholders highlights the Catch-22 effect of the Rudd Government’s proposed resource super profits tax on smaller resource groups.

As discussed previously (What really made Twiggy snap) Fortescue would be peculiarly, among the larger miners, affected by the RSPT. That's because it is unusually leveraged, with high-yield debt. With the RSPT applying before financing costs, its profitability would be decimated.

It used to be the case that the Fortescue strategy of using project financing to develop a new project was the norm for small to medium-sized resource companies without the balance sheets and diversity of cash flows of a BHP Billiton or a Rio Tinto to raise borrowings against their overall balance sheet.

That’s changed somewhat during the first phase of the most recent commodity boom because equity for new projects has become far more accessible.

Elliott, Fortescue’s chairman, raises an interesting issue in his letter to shareholders.

As he says, the cornerstone of the RSPT is the concept of the government becoming a "silent partner" by matching the 40 per cent "take" of the RSPT (before normal corporate taxes) with a promise to refund 40 per cent of any losses if a project fails. In effect, instead of owning 100 per cent of a project, the miner owns 60 per cent of it and an IOU from the government, redeemable if the project fails and paying interest at the risk-free rate of less than 6 per cent, in lieu of the other 40 per cent.

"Who believes that companies could fund 40 per cent of an investment on the strength of some future unbudgeted government tax credit after it failed? No bank wants to fund a failed project on the premise that 40 per cent can subsequently, perhaps, be reclaimed through tax," Elliott said.

An example. What if BHP decided to go ahead with its $20 billion-plus expansion of Olympic Dam, a relatively high-risk investment? What if, in a decade’s time, copper prices dived and rendered the project uneconomic to the point where it had to be shut down?

This was where I stopped reading.

[purch]

Are you closing your mind Gozu? I read all of your posts in full.

From http://www.independentweekly.com.au/news/local/news/general/olympic-dam-freeze/1834556.aspx

Olympic Dam freeze
MELISSA MACK
19 May, 2010 12:17 PM

BHP Billiton chief executive Maius Kloppers will freeze Olympic Dam expansion plans until uncertainty over the Resource Super Profit Tax is resolved.
In an interview with the Australian Financial Review, Mr Kloppers said the $20 billion Olympic Dam expansion plan at Roxby Downs needed a large amount of capital and held many risks.

“I think that it would be extremely unlikely to think that we can approve a major investment while this uncertainty over hangs us,” he said.

Treasury secretary Ken Henry defended the 40 per cent tax on profits made by resources companies, despite continued backlash from the mining industry.


So much for your theory of a trillion $ worth of resources in the ground Gozu. If they can't be extracted at a reasonable profit with an ability to pay back the enormous investment in a time frame where metal prices can't be guaranteed to stay high, then it won't happen. Do you realise that OD has 350m of barren cover sitting on top of the deposit? Do you understand what that means? If not, I can explain it to you. Do you comprehend just how much $$ are involved in removing that cover before a cent is made?

If I were on the board of BHP I would put the money into expanding Escondida in Chile, which has much more in situ copper than OD.

p.s. My knowledge of the fact that OD hasn't yet paid for itself comes from talking to BHPB managers, both before and after their acquisition of WMC, but admittedly not within the last 12 months. With this in mind it would be a HUGE (stupid) risk to sign off on the proposed expansion given the current uncertainties in the tax proposal and the global volatility of metal prices.

[purch]

Polarisation of Canberra and mining sector continues on mining super tax

Heated comment from both sides over the proposed Australian mining ‘super tax' suggests that some compromises may lie ahead despite seeming increased polarization on both sides.

Author: Ross Louthean
Posted: Tuesday , 25 May 2010
PERTH -

The war of words and differing views on the Australian Federal Government's proposal for a 40% resource super profit tax (RSPT) continues. The Labor Government is taking the risky course of inciting the politics of envy while the unified miners and explorers now resorting to warning their shareholders about serious outcomes.

While there is no sign of the Rudd Labor Government giving ground on its intent to impose a 40% super tax on miners, there are now political and business commentators in Australia suggesting a genuine door for negotiations may well be ajar.

However, Rudd and his Treasurer Wayne Swan may not meet the miners half way unless the deterioration of both the Government and the Prime Minister's rating continues to deteriorate in forthcoming opinion polls.

Claims made in Parliament by Wayne Swan that some big miners were only paying between 13% to 17% tax, brought derision from the Liberal Opposition, particularly as it used a paper from a graduate student from the North Carolina University in the US as its source, along with his mentor Professor Douglas Shackelford.

Swan's statement further angered mining companies and some leaders who usually don't dip into political stoushes and while commentators said there may be coloured statements from all sides, a review by analyst George Megalogenis gave perhaps the most balanced view of taxing reality.

Writing in The Australian, Megalogenis said the mining sector was by far the nation's highest-taxed sector because it pays royalties to state governments. However, they may be some of the lowest-taxed for Federal company tax.

He said the effective company tax rate for miners is 27.81%, the lowest out of 19 industry sectors, but when royalties are taken into account the industry moves to 41.34% -- the highest for total tax.

The mining industry is running television and newspaper advertising to show that under the RSPT they would be paying 58% corporate tax - the highest in the Western World.

This brings up the issue that Canberra may try to railroad some of the royalty flow to the States, but there may be a problem there because state ownership of minerals in the ground are written into the Australian constitution.

The Premier of Western Australia, Colin Barnett, has made it clear that this right would not be given up. The mining companies and lobbies have already warned that planned expansions and mines were under review, a point made very clearly by Rio Tinto's Tom Albanese. The Treasurer claims the chief executives of Rio Tinto and BHP, Tom Albanese and Marius Kloppers are either lying or ignorant.

He justifies that extraordinary claim with an odd profit analysis report that has come out of America. This, Gottliebsen said, is the sort of stuff you expected in the bad days in South America and in some African nations today.

"Until now Australia was above our resource competitors in sovereign risk, which is why we are so prosperous," he said.

"The Australian government has resorted to African-style politics because while a resource rent tax (and maybe a tax rise) made a lot of sense in principle, the government did not undertake the required detailed work and consultation before blundering into a badly formed tax and then incorporating it into budget forward estimates, so it had limited room to move.

"It's not just in the profits claim that the government is telling what are ‘quarter truths' - statements that have an element truth but are deliberately or accidentally misleading. I have picked seven "quarter truths" that the government has used to justify its actions.

The points he detailed includes:

· The government claimed a KPMG report said the mining tax would have no effect on investment. The capital strike by Rio Tinto - and the one coming from BHP - show this conclusion was blatantly wrong and makes KPMG look like fools. But what KPMG said was that over 10, 15 or 20 years miners would return to Australian deposits. Meanwhile, thousands of engineers and geologists must work overseas.

· The government continually says that the tax will not affect mining investment. The truth is that there are some 270 projects involving $A300 billion ($US B) in investments that are at risk. Some will go ahead, but those that are close to final decision making have been frozen by the banks and must now wait 18 months or so before the tax is settled.

· The government has tried to paint BHP as a foreign company. This requires no extra comment.

· Kevin Rudd said the mining tax had no effect on the currency and that the Australian dollar fall was totally due to events overseas. That myth had already exploded and Gottliebsen noted the Canadian dollar -- also affected by similar forces -- has performed much better.

· The government says the cost of capital for mining companies is 6%. Every business person in Australia knows that is stupid.

· The government says the plan to give money back to miners if they lose money, thereby making the government a stakeholder, will help project economics. The government did not understand that banks will not count that offer in assessing the equity capital required for a mining project because it is doubtful any government would actually pay it in a global recession. Moreover it lifts sovereign risk.

Among the companies to come out fighting today were mid-tier iron ore developer Giralia Resources Ltd and iron ore major Fortescue Metals Group Ltd. Both detailed the serious nature of the RSPT proposal to their shareholders.

Fortescue's chairman Herb Elliott said the RSPT is bad for every Australian and he urged Canberra to drop the proposal and open a new forum for dialogue.

"We acknowledge Australia needs tax reform and are pleased to be working with the Treasury consultation panel to consider and make input to a new and fairer tax system," Elliott said.

However, he added, the new consultative process does not allow for any negotiation or discussion on the key parameters proposed by the government.

The usually ultra-conservative Institute of Australian Geoscientists today warned the tax would have a profound effect on the loss of exploration and mining jobs and this would have a three-to-fourfold loss of jobs in virtually every sector of business.

From http://www.mineweb.co.za/mineweb/view/mineweb/en/page72068?oid=105333&sn=Detail&pid=102055

[Gozu]

So much for your theory of a trillion $ worth of resources in the ground Gozu.

Aside from freeze = negotiations that 'theory' came from a Liberal Party politician the same party now trying to run a scare campaign on this Super Profits Tax, funny that.

This puts South Australia in the box seat. Australia has approximately 23% of known world resources with a large portion of those located in South Australia.

BHP is planning and currently undertaking an environment impact statement on a massive expansion that will make the Olympic Dam ore body one of the most bountiful in human history.

It is estimated to have one trillion dollars worth of resources.

The revenue and job potential of this massive investment by BHP is hard to comprehend.

In the start up faze alone there will be 13,000 jobs created and when the mine gets up and running it will increase net exports from South Australia over the next 30 years by over $16 billion compared to business as usual.

http://www.liberal.org.au/Latest-News/B ... Punch.aspx

[purch]

So much for your theory of a trillion $ worth of resources in the ground Gozu.

Aside from freeze = negotiations that 'theory' came from a Liberal Party politician the same party now trying to run a scare campaign on this Super Profits Tax, funny that.

This puts South Australia in the box seat. Australia has approximately 23% of known world resources with a large portion of those located in South Australia.

BHP is planning and currently undertaking an environment impact statement on a massive expansion that will make the Olympic Dam ore body one of the most bountiful in human history.

It is estimated to have one trillion dollars worth of resources.

The revenue and job potential of this massive investment by BHP is hard to comprehend.

In the start up faze alone there will be 13,000 jobs created and when the mine gets up and running it will increase net exports from South Australia over the next 30 years by over $16 billion compared to business as usual.

http://www.liberal.org.au/Latest-News/B ... Punch.aspx

Aside from freeze? The freeze is here and now Gozu. It is affecting business right now. Do I need to remind you of this South Australian project again?

http://news.smh.com.au/breaking-news-business/oz-minerals-shelves-project-20100519-vf5q.html

This development was due to be given the go ahead last week, but there will now be at least several months' delay, if not more. All thanks to the ALP's SSRT (super-stupid resources tax). Oh well, there goes 1000 jobs...

[purch]

"Economics 101 on the rise on the rise and fall of the Aussie dollar":

And here’s what the likes of Hockey won’t mention: BHP, Rio and Fortescue, not to mention a host of smaller companies (especially gold miners), have benefited from the drop in the dollar from just over 93 US cents a month ago to just under 83 cents this morning.

In fact, companies such as BHP and Rio Tinto (which report in US dollars, but pay dividends, tax, etc, here and wages in Australian dollars) have made nice gains.

http://www.crikey.com.au/2010/05/25/eco ... ie-dollar/

Yep, and it was the Prime Minister himself who said that we shouldn't look too much into daily and weekly fluctuations. I agree with them on this, but the author of this article obviously doesn't.

[Squawk]

During the GFC, the taxpayer (through the Govt) propped up the banking and construction industries.

Will the Govt insist on a social dividend being returned to the taxpayer in recognition of the taxpayers taking the risks to support these two big industries?

Construction companies for example have made a gazzilion dollars out of the taxpayer, starting with the first homebuyers scheme payments and most recently with the Building the Education Revolution expenditure.

"Super Profits" are relative. I hazard to say banking and construction are in super profit territory. Whilst the mining companies have (to a large extent) steered the Australian economy through the recession, they are now being hit with the RSPT. It seems worth considering a social tax dividend be paid to all Australians by some other big industries who have enjoyed the support of the taxpayer.

I'm still keen to know what I will get out of the RSPT - apparently it will benefit ALL Australians.

[Squawk]

One more point.

Does the RSPT have the potential to be the next "Work Choices" campaign, for this years Federal Election?

For years unions have bankrolled the ALP whilst employers make token donations to both major parties - an 'each way' bet if you like. If the mining companies are serious, they could bankroll a massive election campaign for Abbott and Co which could be just the tonic the Libs need.

[purch]

During the GFC, the taxpayer (through the Govt) propped up the banking and construction industries.

Will the Govt insist on a social dividend being returned to the taxpayer in recognition of the taxpayers taking the risks to support these two big industries?

Construction companies for example have made a gazzilion dollars out of the taxpayer, starting with the first homebuyers scheme payments and most recently with the Building the Education Revolution expenditure.

"Super Profits" are relative. I hazard to say banking and construction are in super profit territory. Whilst the mining companies have (to a large extent) steered the Australian economy through the recession, they are now being hit with the RSPT. It seems worth considering a social tax dividend be paid to all Australians by some other big industries who have enjoyed the support of the taxpayer.

I'm still keen to know what I will get out of the RSPT - apparently it will benefit ALL Australians.

I agree Swawk, Construction companies have, in recent years, been able to essentially 'name their price', and banks continue to do so as well. I ask though, has the mining industry been supported by the taxpayer in any huge way, the same as you say these other industries have? I do think this is just a sign of things to come from this government.

Nice to see the political debate has now moved back to "significant national security issues"...something we all love Thanks Mr Rudd. Mr Howard would be proud. pfft!