Australia is seen as such a great place to mine because of the vast data base of drilling, massive exploration, pro-mining history, plus formerly stable political & legal systems for miners. There are vast areas of the earths crust not properly explored, we are not as unique as people think in mineral endowment terms. Australia was unique in some respects because of a combination of all of the above - particularly the low sovereign risk factor being even above Canada.
Investment in mining is high risk so the rewards should be high. Risk / reward must be in balance or no investment, income, jobs, royalties, company tax, GST or massive knock on effect in economy. Weak mining industry in total = weak Australian economy (forget about the few that make it to the top because they are the minority).
Due to the massive scale of some projects, only a few, the big operators can get rich taking just a tiny part of the unit cost. Lots of units - maybe 50c per tonne x 10B tonnes = $5B. This is why Mr Forest is wealthy now. Probably 100 times his cut goes to other parts of the overall equation including investors, taxes, wages, contractors etc. My figures are indicative not actual - for example only.
For every "Twiggy" there are thousands of smaller operators that make up this industry that are still hit by the tax whenever they have a good year or two. They live in the hot and the dry dust risking all and not many ever get rich however if they happen to get lucky the government is standing there to take 57% - wow how fair is that? What about all the non profitable times for this industry when commodities were not in a boom time - did the Government assist them then - NO.
Now things are finally good and investment is booming creating; jobs, company tax, GST receipts, contractors, related businesses of all descriptions supplying engineering, tyres, shop keepers, consultants, investors, finance and you name it - the Government seeks to make it uncompetitive. Blunders in and ruins the risk / reward balance stalling all of the above via investment in new projects right in its tracks.
The cost is so large and widespread that those without a significant understanding of commercial reality and macro-economics cannot possibly imagine how much damage has been done. The government that governs best governs least.
Government needs to provide a stable safe environment for all of us to make a living, pay off our mortgages (= having a job), create businesses, bring up our children, breathe, eat etc. Imagine if they did this RSPT to the farming industry in good years, after all look at their wealth controlling vast area of our country - the big guys - similar argument? Imagine if food got disrupted? Well look at how we all live, metal in computers, houses, cars etc - just as essential to modern lifestyles when you want to drive, eat, turn the light on etc.
The economy has benefited massively from this once in a generation mining boom at a very difficult time in the worlds economy - a time when the biggest debt bubble in history threatens to burst. Ideological fools have just decreased the future benefit to all of us threatening the welfare budget, taxation revenues, in short our way of life and affluence.
Wake up Austalia your future depends on a strong mining sector at this point in history and this government, led by Gillard and Swan (formally Rudd) have been at the helm overseeing massive wastage, incompetent interference, mismanagement and some excellent social reforms. Overall I liked Rudd on a personal basis and am not a Liberal supporter as such I just want the best for Australia - my kids etc - and a fair go to get on with business.
Don't listen to or believe in corporate or government spin they do it to cover their mistakes, lack of checks and balances etc but never do it for us the real Aussies. This tax hurts all of us so a government with no commercial experience can cover excessive spending (will keep going is the nature of this beast). When mining goes flat we will all have to pay the balance off via higher taxes - this is truth. Due to the way the RSPT hurts and weakens the whole industry we will be paying more sooner rather than later. I cannot stress the knock on effect any stronger - we lose!
Very best to all I am enjoying your stimulating posts and ideas, CW
