Levevre,I totally disagree that the projects could be...

Levevre,

I totally disagree that the projects could be uneconomic. A project with an NPV of $500m for Teresa and $1000m for Galilee will not go negative NPV just because of the proposed Rudd tax. If the projects were more marginal, with an internal rate of return closer to the cost of capital, then I would agree with you. That is the not the case for LNC. The internal rate of return far exceeds the cost of capital as shown by the very favorable NPV. Remember also that Economics 101 says that a proportion of the tax will be passed on to buyers of resources, while a proportion is absorbed domestically. The split is determined by the extent of price control a sector has.

More importantly, Rudd hasnt got this tax through the Senate and is unlikely to in my opinion. He hasnt got anything else through, so why should he with this.

Rudd needs to demonstrate that taxing the resources sector is justifiable because he can obtain greater economic or social rates of return with the capital elsewhere. He cant and that is why it is bad economic policy.

Even far more important is the option for LNC to finance its GTL plant via a joint venture with a large coal company. They have repeated on a number of occasions that they do not need the coal sales to proceed.

Cheers
Bleasby