Soaring costs hit resource industry

Resource industry leaders have warned the cost escalation behind Woodside Petroleum’s shelving of its Browse LNG venture and increasing regulatory burdens are threatening the competitiveness of local projects and costing jobs, according to the Australian Financial Review.

The delay in the $45 billion-plus Browse venture follows BHP Billiton’s decision in August to drop a $US30  billion expansion of its Olympic Dam mine in South Australia.

Shell’s and PetroChina’s plans for their $20  billion-plus Arrow LNG project in Queensland are in doubt, while ExxonMobil and BHP have turned to floating LNG for their Scarborough gas project instead of an onshore plant in Western Australia.

Former Rio Tinto chief executive Leigh Clifford blames skill shortages, industrial relations and taxes for the cost increases plaguing the sector.

Miners prepare for worst from budget

Australia’s resources sector is preparing to be slugged in next month’s federal budget, amid fears an increased tax hike could hinder the sector’s recovery, according to the Australian Financial Review.

Queensland Resources Council chief executive Michael Roche told a tax conference in Brisbane on Monday that miners hit by royalty rises in Queensland and Western Australia in recent years feared the worst about the May budget, saying there appeared to be a “desperate rush for cash”

“Somewhere between thin capitalisation rules, accelerated depreciation, exploration deductibility and fuel tax credits – a pocket is waiting to be picked,” Roche told the Minerals Council tax conference.

He said the present effective taxation rate on a new coalmine in Queensland was 50% – well above our international competitors.

He said about half of Queensland’s coalmines will be under serious competitive threat if they cannot control costs, and dramatic cost cutting in the past 12 months is expected to continue over the next few years.

Original resource tax would have left deeper deficit

The federal deficit would be $1 billion deeper if Labor had stuck to its original resource tax, according to new findings that rebuff calls to return to the old policy to fund big spending programs, according to The Australian.

Deloitte Access Economics director Chris Richardson highlighted the flaws in the original tax yesterday by estimating that mining companies would have claimed huge refunds under the scheme if it had gone ahead.