the worst government ever !, page-117

Interesting discussion on this chain... most of which is misinformed (especially when it comes to the RSPT). The biggest problem is the name... it should be called the Resource Rental Charge.

I mainly invest in resources stocks and therefore am affected, but in some respects, resources companies have been getting it easy for some time. The companies don't pay for the resources they actually pull out of the ground (which are owned by the Australian people and therefore in effect by the Government).

The easiest analogy for the current situation enjoyed by mining companies is a manufacturing company that doesn't have to pay for half of the inputs or materials which are provided for free by the Australian people or Government of the day.

When you look at the financials, mining companies do tend to have extremely high profit margins (and this is due to not fully paying for the inputs... ie the ore they process). BHP made an EBIT profit margin of 24% in 2009 (a bad year) and 41% in 2008 and 2007 (obviously better years). There are not a lot of companies with the scale of BHP that make those kinds of profits. And this is after all expenses including royalties... sounds like a pretty good deal to me (as a comparison... WBC had equivalent EBIT margins of 17% and 16% for 2009 and 2008 respectively). Some of the smaller companies have even better margins (eg MML which had an EBIT margin of 69% for the last half and should have similar if not higher margins going forward... albeit it doesn't operate in Australia).

I'm sure the government will relax the initial proposal, but I think the large resource companies will be paying more for access to the resources... and rightfully so.

And it seems that small explorers will be better off with rebates for exploration expenditure.

Anyway... my 2c worth... and I don't expect to get much support for this post!

Cheers
Marvin