Australian coal producers being hit by costs: ANZ
Domestic coal producers are feeling the pinch and many new projects may be put on hold, says ANZ commodity analyst Mark Pervan after he toured Queensland and NSW coalfields, The Australian reports.
Pervan found Chinese demand has slowed and not likely to improve until the December quarter. India is taking only coal covered by contracts and is largely absent from the spot market, while Japan is well covered for the remainder of the year.
Queensland ports are operating at between 40 and 60% coal capacity, well below normal levels. Slower demand for coking coal has cut shipping activity, but the prolonged mine strike is also taking its toll.
A few weeks ago, Pervan reported that 10% of Indonesian coal producers are selling at below cost. But the squeeze is also evident here in Australia: on this latest trip, he found operators in the eastern states reporting capital costs have risen almost fivefold over the past five years.
Resource nationalism heads miners’ worries
Miners are becoming concerned with resource nationalism in resource hubs around the globe, some ready to blame the federal government for setting the precedent for other governments to lift mining taxes, according to The Australian.
Ernst & Young's annual mining risk report, released today, indicates resource nationalism is the No 1 concern, highlighting that projects around the world have been delayed or even dumped because of the degraded risk and reward equation because of increasing royalties and taxes.
Perth's Cazaly Resources joint managing director Clive Jones said resource nationalism was clearly a concern in Australia but was also becoming an issue in the world's other mining regions.
He said a concern about the introduction of the minerals resource rent tax was that it would have a knock-on effect in other countries, setting the example for other governments to follow.
Rift deepens on business tax cut
Businesses and tax experts have renewed their call for a company tax cut as hostilities between unions and the Greens increase doubt on Prime Minister Julia Gillard’s ability to deliver a $2.4 billion-a-year reduction, the Australian Financial Review reports.
Treasurer Wayne Swan’s business tax working group is due this month to recommend ways of reducing the rate for businesses earning more than $2 million.
President of the CFMEU mining and energy division Tony Maher and Australian Workers Union secretary Paul Howes have joined a Labor push for differentiation from the Greens before the party’s NSW conference next weekend, which has enraged the Greens. This comes as the Gillard government tries to argue for reforms such as the tax cut that are expected to need Greens support in the Senate.
The Tax Institute’s Robert Jeremenko said the stoush could threaten the delivery of reform that would reduce business costs, which would see higher pay and more wages.
Queensland joins High Court battle against mining tax
Queensland will challenge the mining tax in the High Court, claiming the federal government's July 1 revenue raiser unfairly discriminates against the resource-rich state, according to The Australian.
As Premier Campbell Newman and Julia Gillard prepared to meet today in Brisbane, the state government announced it would join the legal battle launched by Andrew Forrest's Fortescue Metals Group last month against the tax, which is forecast to raise $13.4 billion over the next four years.
