Your example was for an existing producer whereby the market had downgraded the market cap by $200mill. Therefore my statement holds that the $200mill lost by investors would be recouped by the government over a 10 year mine life. I was simply pointing out that comparing 1 year governemnt revenue to the market cap lost was perhaps not the most appropriate analysis.
Valuing a proposed project on a DCF basis is another matter. I have no doubt that many marginal projects wont get off the ground due to the new tax. I actually see this as a positive, heres why:
* In WA there have been projections of a much bigger labour shortage than already exists due to the mining boom. Already causing inflation and housing bubble, we dont need it compounded. SLOWING mining investment here is wise. Not sure about QLD, I would suggest similar? You cant lose jobs from the tax when we dont have the people to fill them in the first place.
* If those marginal projects do get off the ground and there isnt a resource tax, what happens when commodity prices cycle down? We have mine closures and more damage to the local economy than if the project had not got off the ground in the first place. Just ask people from Hopetoun about the fallout from the Ravensthorpe nickel debacle. therefore I suggest the tax has a smoothing effect on business cycle. Smaller boom , smaller bust.
My comment regarding the ports and rail was more tongue in cheek, I agree that most cases it would be build it and some industry will use it. Even in the pilbara could we see some sort of agricultural export opportunity arise?
As for where people would rather invest their money, if a project is robust then the investment will follow...even the RIO CEO admitted to such, the AQA board admitted to such with their iron ore project, otherwise the money would flow into bank deposits (good for Australian saving rates and bank capital) or non mining industry, again good for the diversification of Australian economy...again if we dont encourage this NOW what happens when the resources run out? Do we just leave that issue for future generations? lol
