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Category Archives: mining

21 Apr, 2012 04:00 AM
Maitland Mercury
 
After spending almost a year visiting Australia’s coal mining communities Sharyn Munro discovered a warzone. She observed what’s really happening at the coalface: towns and districts dying, people hurting, rebelling and ultimately paying the price for the nation’s mining boom.Munro listened to stories of homeowners being forced out of townships, broken in spirit and in health, or else under threat – their lives in limbo as they battle the might of huge mining companies.

This is what she found.

Sharyn Munro is not anti-mining. She is a writer and grandmother with a social conscience wanting to inform the ordinary Australian of what is happening in rural areas.

And she opposes inappropriate development of any sort, driven by the impact of mining she has watched overwhelm parts of the Hunter Valley.

In her latest book Rich Land, Wasteland, Munro presents an impassioned account of the human price individuals and communities are paying for the coal rush.

“I wrote this book to share with Australians what I experienced and learnt,” Munro said. “Most Australians, I believe, are decent people who would be appalled by what is going on if they knew.”

During her research for the book, Munro discovered that incidences of asthma, cancers and heart attacks show alarming spikes in communities close to coal mines and coal power stations.

Once reliable rivers and aquifers are drying up or becoming polluted. Once fertile agricultural land is becoming

unusable and what was once a rich land is becoming a wasteland.

“I am motivated by concern for the health and futures of my grandchildren who have been living in the coalafflicted

Hunter, and for everyone else’s grandchildren who must breathe such polluted air and who face devastated and dewatered landscapes that will be unusable.”

The large, mostly foreign-owned, mining and gas companies continue to push into new areas and Munro observes that our governments continue to help and protect them at the expense of rural communities.

 http://www.maitlandmercury.com.au/news/local/news/general/coal-hard-facts/2529197.aspx

Julia’s brilliant backflip
July 2, 2010 – 1:18PM

Mal Maiden dissects Julia Gillard’s new mining tax. What does it mean for business and who is going to pay?

Is this a massive backflip by the government or a brilliant piece of re-engineering that sets Julia Gillard up for an early election? Both.

The new Minerals Resource Rent Tax is almost unrecognisable from the Resources Super Profits Tax it replaces.

Instead of being applied across the entire resources sector, it focuses on only two mining businesses, iron ore and coal, with the existing Petroleum Resources Rent Tax extending to the domestic oil and gas industry, including the fledgling coal seam gas projects in Queensland.

Prime Minister Julia Gillard and Treasurer Wayne Swan at today’s announcement. Photo: Andrew Meares

Instead of being an elaborate scheme that sees the government take 40 per cent of mining profits but also assume 40 per cent of the development costs and risk on each project, it simply taxes the miners at the mine gate, for 75 per cent of their income at that point, at a rate of 30 per cent.

This concession, that the miners pay only 30 per cent of 75 per cent of their income at the mine gate after costs to that point are deducted means that the real new resources rent tax rate is about 22.5 per cent, not 30 per cent as advertised.

Instead of forcing the big miners into a resources tax regime with the big mines still valued at book value, a fraction of their real worth, it gives them a choice (it’s complicated, but here goes): either bring their existing mines into the scheme at book value, in which case they will be able to aggressively create depreciation tax deduction over just five years, and will not be liable for the 30 per cent resources tax until their mine returns have exceeded the 10-year Commonwealth bond rate plus 7 per cent (about 12 per cent currently), or bring the mines in at market value (defined as cash flow plus the risk value of the resource) but write the value down in smaller increments over a longer period, up to 25 years, and have the tax imposed without a hurdle rate. It’s likely that the big miners will opt to inject their assets in at market value. In either case, they can claim what they invest in their mines as they go.

Inspired move

And instead of applying to all mines, the tax also exempts iron ore and coal miners with profits of less than $50 million. This is an inspired idea, and like the proposal to limit the scope of the tax and exclude not just quarries and other low value operations but copper, nickel, gold and bauxite mines it came from the big three miners who were negotiating the deal, BHP Billiton, Rio Tinto and Xstrata.

These two measures see the number of companies affected by the new tax fall from about 2500 under the original proposal to about 320, significantly reducing the risk that the deal will be seen as one cooked up by the big three miners for the big three miners.

The existing 40 per cent Petroleum Resources Rent Tax is also being extended, to cover not just offshore projects but the entire Australian oil and gas industry, including the merging coal seam gas producers and exporters in northern Queensland, and the oil and gas groups will also be able to elect to inject their assets at market value, and expense their development costs as they go.

Gillard makes the call

So if radical change to the original proposal qualifies as a backflip, this certainly is one. But it’s a backflip from a tax proposal that was launched and prosecuted by Kevin Rudd, not Julia Gillard. Treasurer Wayne Swan was involved in the talks this week, but the key figures were Gillard, who in personal calls to BHP chairman Jac Nasser and other convinced the big miners that she was genuine about settling the dispute, and resources minister Martin Ferguson, who Gillard inserted into the process after her appointment as PM.

And it is one that has been achieved at a manageable cost to the budget. The tax take in the first two years to 2013-14 falls by $1.5 billion to $10.5 billion, as the government loads in higher commodity price assumptions that are closer to what is actually being achieved this year, cuts its linked cut in corporate tax by one percentage point to 29 per cent, and axes its poorly received exploration tax rebate.

The deal seems to cover all the bases. It satisfies Gillard’s only condition, that the government’s tax take from the resources boom rise. And it exempts most mines from a new tax, while charging those captured by the regime less than the 50 per cent plus total tax rate they faced under the Rudd version.

The iron ore and coal miners will pay corporate tax after the resources tax has been paid, and when coal and iron prices are high as they now, will face a total tax bill of more than 40 per cent, with a maximum above 45 per cent, according to one person close to the negotiations.

There’s a way to go. The Greens have been making ominous noises about blocking a compromise, for example. But Gillard’s backflip is politically marketable – and an election campaign must surely now be just around the corner.

mmaiden@theage.com.au

From: AAP January 11, 2010 2:56AM

Western Australia has the nation’s fastest growing economy, buoyed by mining

Growth economies revealed
WA and ACT at the top
NSW the nation’s poorest performer

AUSTRALIA’S largest state and the nation’s smallest territory would on the surface appear to share little in common.

One has a vast supply of mineral resources that has made it the engine room of the domestic economy, thousands of kilometres of coastline and a capital city regarded as the most isolated in the developed world.

The other is situated neatly between Sydney and Melbourne, is about 150 kilometres from the Pacific Ocean and has about half its land set aside as nature parks and reserves.

So comparisons between Western Australia and the Australian Capital Territory are stark, but CommSec says in terms of economic performance they cannot be split at the top of the pack.

CommSec chief economist Craig James said based on eight key indicators, WA and the ACT are Australia’s two best-performing economies.

“Western Australia is the fastest growing economy, buoyed by mining-related construction and investment,” Mr James said in a research note.

“And solid growth in residential construction and property sales has propelled the ACT to the top of the economic rankings.”

Mr James said he expected WA to remain in the lead in early 2010 as the state benefitted from the strong recovery in the Chinese economy, but the outlook for the ACT was not as certain.

“The ACT and Tasmanian economies may slip modestly down the leader-board as the global economy recovers, with Queensland and Victoria having the greatest potential to move up the rankings,” Mr James said.

The eight indicators were economic growth; retail spending; business investment; construction work done; population growth; housing finance; dwelling commencements and unemployment.

WA topped three categories – economic growth, business investment and construction work, while the ACT was judged the best in terms of housing finance and dwelling starts.

New South Wales came in last in four categories – economic growth, unemployment, construction work and dwelling starts.

In terms of the overall standings, Tasmania held the title three months ago, but has slipped to third.

Mr James said smaller states and territories such as Tasmania and the ACT have not suffered as badly as the bigger states during the US financial crisis.

South Australia fell from second to fourth, while Queensland was one spot back in fifth place.

Mr James said Victoria was one of the big improvers over the past three months, climbing one rung into sixth.

Northern Territory was seventh, while Australia’s most populous state NSW was the nation’s worst performing economy.

Mr James said NSW had the potential to lift off the bottom of the economic leader-board if faster population growth could be translated to increased construction, investment and overall economic growth.

“NSW should benefit from the ending of the US financial crisis via a stronger job market,” Mr James said.

“But it is a long way behind the other states and territories due to the stagnant activity in the construction sector.”

July 1, 2009

THE decades-old benchmark system for setting the price of iron ore looks to be on its last legs with no agreement expected by last night’s deadline between major producers and Chinese steel mills, as reported in the Herald yesterday.

Rio Tinto and BHP Billiton had until midnight last night to reach an agreement or risk moving to volatile spot prices for its customers.

It would be the first time in the 42-year history of the benchmark system that no agreement has been reached by July 1.

“I think there is definitely going to be a move away from the benchmark towards spot pricing and index pricing,” said a Fat Prophets mining analyst, Gavin Wendt.

The move may play into the hands of BHP Billiton, which has said the benchmark system should go.

Rio Tinto confirmed that some contracts may revert to spot market pricing today as China’s steelmakers argue for a deeper cut than its Asian rivals agreed.

A Rio spokesman, Gervase Greene, said talks were continuing: “Rio has long been a supporter of the benchmark system but if customers choose to buy on the spot market instead they will.”

China overtook Japan as the biggest buyer of iron ore in 2003. Until then, benchmark prices had usually been set by Japanese or European steel makers.

Although other Asian steel makers have accepted new benchmark prices, mills in the world’s largest iron ore market – China – have held out for a better deal.

Benchmark agreements settled by Rio Tinto included a 33 per cent cut to last year’s prices. The Chinese mills are insisting on reductions of 40 to 45 per cent.

Mr Wendt said the Chinese risked being left short of supply unless they signed a deal, especially if demand picked up in Europe.

“It is a high-risk strategy for sure. They are trying to play this game of brinkmanship,” Mr Wendt said. “They are trying to stare down Rio, and Rio isn’t blinking.”

The Brazilian producer Vale has been waiting for Australian miners to settle contract prices before concluding its own agreements. It has agreed to cut prices by 28 per cent for ArcelorMittal.

http://business.smh.com.au/business/end-of-era-as-china-holds-out-on-iron-ore-20090630-d3u6.html?sssdmh=dm16.384704

ELIZABETH KNIGHT
June 11, 2009 – 11:57AM
The Chinese cannot be accused of being slow to learn their lessons.

Minmetals would have watched very closely the unfolding disaster that fellow Chinese-owned Chinalco suffered last week at the hands of the board of Rio Tinto.

Chinalco had a once in a lifetime opportunity to get its hands on some unparalleled resource assets in Australia.

It was in the box seat to double its stake in Rio Tinto and take direct stakes in highly sought after assets but it blew it. It got greedy.

Had it delivered a drop dead price on day one the outcome could have been very different.

Minmetals last night and at the 11th hour increased its offer for the OZ Minerals assets it is able to buy, by 15 per cent to $US1.386 billion ($1.75 billion).

The sale of these assets has been one of the most contested deals in recent corporate history.

Macquarie Bank was the primary rival to Minmetals – the Australian bank’s plan involved a recapitalisation for which it would receive some hefty underwriting fees.

But in the end Macquarie’s deal was too risky – given that it would need to provide bridging finance until an issue had been undertaken.

Only a very brave – or foolhardy – organisation would extend finance to an overgeared company like Oz Minerals whose existing bankers are already holding a gun to its head.

Going into this morning’s OZ Mineral shareholder meeting to approve the Minmetals the board made it clear that the banks had cocked the trigger and were ready to squeeze in the event that investors voted against the sale of assets to Minmetals.

It could be argued that on this basis – and given the proxies received indicated that it would be approved – that Minmetals didn’t need to raise the offer.

But there is nothing like certainty – even if it comes at a price.

Lobbing a better offer – and one that sits inside the independent experts range of values – is probably cheap insurance.

eknight@smh.com.au

Clancy Yeates
June 11, 2009

THE Parliamentary Secretary for Climate Change, Greg Combet, has warned coal producers that time is running out for haggling over the carbon pollution reduction scheme, and they could receive less government support if a stalemate in negotiations continues.

Mr Combet, who is trying to get coal producers on side with the Government, yesterday said coal was unlikely to qualify for support as a trade-exposed industry.

And in a veiled threat, he said failure to reach an agreement could leave the Government no option but to negotiate with the Greens, who favour even less assistance for the sector.

“It is time … for the coal industry to very carefully think about where things are up to and the fact that time is starting to get very tight now,” he told a business audience in Sydney.

The Senate will vote on the proposed scheme later this month, and Mr Combet said the Government was fully intent on passing the bill.

“When the Government is determined to prosecute legislation through the Senate it has to get support from somewhere. Now Senator Wong, my minister … is having discussions with the Greens, and the Greens are opposed to any assistance of this form for the coal industry, and they are certainly opposed to any more assistance.”

The Government has offered coal producers $750 million over five years but the industry has demanded up to $10 billion.

The sector – the country’s biggest export earner, worth $54.5 billion last year – says it should qualify for compensation as an emissions-intensive trade-exposed industry.

Global heavyweights such as Xstrata and Anglo Coal have warned that under the scheme many mines will be closed because their foreign competitors will not face a carbon price.

But Mr Combet, whose electorate is the coal heartland of the Hunter Valley, said the impact of the scheme varied according to methane emissions of each mine. The liability of emissions could range from 80c a tonne of coal produced to $20 a tonne, and Mr Combet said support should favour the most severely affected producers.

More broadly, he argued that progress on a US emissions scheme highlighted the need for local business to get behind the Government’s proposal.

He said US business would face greater uncertainty under the proposed scheme than companies in Australia, and assistance in the US would be concentrated on a narrower range of industries.

http://business.smh.com.au/business/combet-lays-down-law-to-coal-miners-20090610-c3mm.html?sssdmh=dm16.381331

Barry FitzGerald
June 11, 2009
OZ MINERALS will proceed with a shareholder vote today on its controversial $1.5 billion refinancing deal with China’s Minmetals after a last-minute $1.4 billion alternative proposed by Macquarie Group last night fell over in embarrassing fashion.

Macquarie told OZ it could not deliver the “degree of certainty” its board would have required to support the proposal. It is believed that Macquarie was unable to secure sub-underwriting support from a market yet to be fully convinced that recent commodity price strength will stick.

OZ said that without the necessary guarantees in the Macquarie proposal, it would have been faced with the same dire consequences it would have faced if the Minmetals deal had collapsed – the prospect of its banking syndicate forcing a move into administration.

But OZ’s chairman, Barry Cusack, faces a tough assignment in herding shareholders towards the Minmetals vote. This is likely to prompt a heated debate at today’s meeting in Melbourne on OZ’s dismissal of Macquarie’s initial alternative proposal, and a $1.5 billion recapitalisation proposal put forward by the RFC Group and the Royal Bank of Canada.

OZ said earlier this week it was convinced the Minmetals deal remained the best solution to its debt woes following a “scrupulous” assessment of competing recapitalisation plans. The deal involves OZ selling all its assets to Minmetals with the exception of its new Prominent Hill copper and gold mine in South Australia.

OZ said that while the board considered Macquarie’s original equity recapitalisation proposal to be better than the RFC-RBC proposal, neither was superior to the Minmetals deal.

Like Rio Tinto’s now aborted $US19.5 billion refinancing deal with China’s Chinalco, the OZ deal with Minmetals was struck in February when the cloud over commodity prices from the global economic crisis was at its darkest.

Commodity prices have since rebounded, convincing Rio to refinance itself through a heavily discounted rights issue and an iron ore joint venture in the Pilbara with BHP Billiton.

But OZ’s refinancing needs have been more pressing than Rio’s, with the company raising the prospect of having to go into administration if it could not deal with the $1.1 billion debt repayment demands of its banking syndicate.

An early deadline was recently extended to June 30 to allow time for the Minmetals deal to happen.

An independent expert has previously valued the assets to be sold to Minmetals at up to $2 billion, $500 million more than on offer from Minmetals. But the expert said that the deal was in the best interests of shareholders. OZ shares closed down 2c at 89c yesterday.

By staff writers
NEWS.com.au
June 05, 2009 02:41pm

MINING giant BHP Billiton may launch a new takeover bid for rival Rio Tinto, after the two announced a $US10 billion ($12.47 million) joint venture and the death of the Rio Tinto- Chinalco deal.

“We obviously can’t rule in or rule out anything,” BHP Billiton chief executive Marius Kloppers said.

“As a result of our previous bid for Rio, there are a number of conditions that I can point at and those obviously still remain.”

Mr Kloppers pointed to the more than $US10 billion savings the two companies say they seek from the WA joint venture, which “were such an important part of our original desire to put these two companies together”.

BHP Billiton’s hostile bid for Rio fell through last year amid concerns over Rio’s debt burden resulting from its 2007 acquisition of Canadian aluminium giant Alcan.

BHP Billiton cannot make a fresh bid for Rio until November 25 this year – 12 months after its last bid collapsed – under the UK’s Takeover Code rules.

Related Coverage
Rio shares: Check the latest

Leaving a list of winners and losers
Herald Sun, 6 Jun 2009
Rio jilts Chinalco for BHP
The Australian, 5 Jun 2009
Rio deal with Chinalco dead
Adelaide Now, 5 Jun 2009
Rio’s Chinalco deal is dead
Perth Now, 5 Jun 2009
BHP may move on Rio, UBS say
Perth Now, 15 May 2009 Your Say
Rio Tinto and BHP are not Australian companies, BHP was sold off to England and London to Billiton and CRA was sold off to Rio Tinto in London, therefore regardless all the mining i…

(Read More)

Dave of Perth Reports from the UK in February said top institutional investors had urged BHP Billiton to relaunch a takeover bid for Rio Tinto to scupper its now abandoned deal with Chinalco.

Chinalco-Rio Tinto deal dead

Overnight, Rio Tinto walked away from what would have been the biggest deal in Australian corporate history, its $US19.5 billion ($24.4 billion) alliance with Chinalco.

Rio Tinto chairman Jan du Plessis said in a letter to shareholders the planned deal with Chinalco was now dead and his company would pay it a $US195 million ($243.2 million) break fee.

“The transaction announced and recommended by the boards will now no longer be pursued,” Mr du Plessis said.

In a statement, Chinalco president Xiong Weiping said he regretted the deal was off.

“In recent weeks Chinalco has worked hard to respond constructively and engage with Rio Tinto to make appropriate amendments to the transaction terms … to better reflect the changed market background and feedback from shareholders and regulators.

Rights offer

Rio Tinto, saddled with about $US38.7 billion in debt, had been pursuing a tie-up with Chinalco.

With the deal off, Rio Tinto will seek to raise $US15.2 billion in a rights issue, which shareholders in Rio Tinto and its London-based Rio Tinto Plc can take part in.

Shareholders will be offered 21 new shares for every 40 shares held at $28.29 or 1400 pence each.

Rivals to team up

With the Chinalco deal off, BHP Billiton and Rio Tinto announced a 50/50 joint venture, combining all their iron ore assets in Western Australia. It is expected to save them $US10 billion.

The joint venture deal is likely to annoy Chinese steel producers, which have long believed the big Australian iron ore producers hold too much power to decide iron ore prices.

BHP Billiton is the world’s biggest mining company and Rio Tinto is the third largest.

“I am delighted that we are able to announce a transaction that can deliver significant real and quantifiable synergies to our shareholders,” BHP Billiton chairman Don Argus said.

By midday, BHP soared $2.83, or 8.06 per cent, to $37.94, while Rio advanced $6.60, or 9.87 per cent, to $73.50.

http://www.news.com.au/business/story/0,27753,25590805-462,00.html?referrer=email&source=eDM_newspulse

SUZIE KEEN
2/06/2009 4:57:00 PM

The mammoth environmental impact statement for BHP Billiton’s Olympic Dam expansion is on show until 8pm today at the Adelaide Convention Centre, but Greens MP Mark Parnell has attacked the “shopping centre-style walk-through display”.

“The words of an unaccountable BHP Billiton employee in a one-on-one conversation in front of a pin-up board are a poor substitute for a decent public and media debate about the biggest project in the state’s history,” Mr Parnell said of the display.

Olympic Dam will be the world’s largest copper and uranium quarry, and the EIS has been described by Mines Minister Paul Holloway as “the largest document ever prepared in this state”.

It takes 110 pages just to list the guidelines. The SA Government has extended the normal consulation period to 14 weeks so the public has more time to consider the statement.

The Australian Conservation Foundation today claimed BHP plans to expand the mine much further than is outlined in its Environmental Impact Statement (EIS).

It said the company had applied for State Government approval to extract up to 1 million tonnes of copper product a year, even though the EIS examine an expansion of only up to 750,000 tonnes a year.

“BHP has failed to advise the public of the full extent of the proposed mine expansion and is seeking approval for the right to operate a much larger project than the studies in its EIS suggest,” said ACF nuclear campaigner David Noonan.

“Radioactive waste from the mine, damage to the marine environment from desalination and greenhouse pollution from additional energy demand may all be one-third worse than envisaged by the company’s EIS.”

Copies of the EIS can be found at http://www.olympicdameis.sa.gov.au.

http://www.independentweekly.com.au/news/local/news/general/olympic-dam-eis-on-display-in-adelaide/1529637.aspx

Posted 9 hours 3 minutes ago

The Climate Institute has released a report showing the Federal Government’s emissions trading scheme and other environmental policies will create tens of thousands of jobs.

Both sides of the debate are intensifying their lobbying effort ahead of this fortnight’s parliamentary debate.

The Minerals Council released a report last week showing the emissions trading scheme would cost 23,500 mining jobs.

But the Climate Institute’s John Connor says the scheme will create other opportunities.

“This report looks particularly just at the renewable energy jobs that are there with real jobs, real plans, real projects,” he said.

“That’s up to 30,000 jobs and over $30 billion worth of investment – much of that in regional Australia.”

Mr Connor says the debate is intensifying now that the legislation has been tabled in Parliament.

“We’re keen to put forward the good news the polluters don’t want you to hear,” he said.

“There are jobs that are growing already in these sectors and they’ll grow a lot more as we take the policies that will clean up economy.”

http://www.abc.net.au/news/stories/2009/05/25/2579432.htm?section=australia