London-listed African Minerals has announced further significant Chinese investment in its Tonkolili, Sierra Leone, iron ore project, now by Shandon g Iron & Steel, which plans to put USD 1.5bn into mine and infrastructure development. This will gain the State-owned Chinese steelmaker a 25% equity stake in Tonkolili, and an offtake of 10m tons a year of seaborne iron ore, at discounted rates.

The latest deal in West African iron ore, which has captured billions of dollars of mining investment in the past few months, once again illustrates China’s long term commitment to financing resources in specified minerals and commodities.

At the same time, the deals show that not even the world’s biggest mining companies have sufficient individual resources to cover all the risks in these investments. Even the capital required for a new world class iron ore mine seems to be beyond the biggest individual miners. By iron ore standards, African Minerals is a minnow, and needed partners from day one. On 6 January African Minerals announced a deal with China Railway Materials Comme rcial Corporation (CRM); overall, African Minerals/Tonkolili have now agreed to sell up to 35m tonnes of iron ore a year, to CRM and Shandong Iron and Steel. But it will take years before this level of output is possible, and many more billions of dollars worth of investment. Tonkolili may have dreams of one day producing 70m tonnes a year of iron ore, but by that stage, capital investment would likely be approaching the USD 10bn mark. African Minerals currently holds a market value of USD 1.8bn.

Read more at http://www.mineweb.co.za/mineweb/view/mineweb/en/page39?oid=107886&sn=Detail&pid=102055.

See http://www.postcourier.com.pg/20100707/news18.htm.

For the report and the companies’ responses, see http://www.business-humanrights.org/Documents/DanWatchCerrejon.

This was backed by real, or vacuous threats, to quit the country’s shores – or at least withdraw from some key projects.

In fact, none of the companies have made concrete moves to do so, while investors’ confidence in the industry, over the past 2 months, hasn’t appeared to be significantly dented. Although Australia’s fiscal policy has been in disarray for some time – not least following the September 2008 meltdown – the country is still the world’s biggest supplier of coking coal, alumina, lead and iron ore -  the three global giants would have cut off big chunks of their noses, had they actually followed through on their threats.

The compromise measures, now apparently agreed between miners and government, are in some respects not significantly different from the discredited “Super Profits” tax, except insofar as applying a tax rate of 30%, as opposed to 40%, charging at a lower “trigger point”, and with fewer companies subject to the new measures.

The new tax will be called a “Resource Rent” – a well-worn concept, no doubt calculated to provoke far less anxiety than the spectre of companies ripping off the state and people and walking away with billions off ill-gotten gains.

In reality, however, while the former proposal was estimated to recoup Aus$12 billion in revenue for the government by 2012, the revised taxation regime is likely to garner only a little less (around Aus$10-11 billion).

Mind you, there’s quite a lot to which the “missing” billion might have gone. Not least in increased dues to the Aboriginal communities who have had to sacrifice an increasing amount of their territory and resources to mining over the past 25 years.

See http://www.minesandcommunities.org/article.php?a=10228.

See also:

Fortescue says new mining law favours multi-nationals

Australia’s watered down tax on mining profits favours multi-nationals and diversified commodity producers at the expense of smaller companies, iron ore miner Fortescue Metals told a government hearing.

See http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=107866&sn=Detail&pid=92730.

The “super profits tax” has been discarded in favour of a resources rent tax that has been endorsed by key global miners including London-listed BHP Billiton, Rio Tinto and Xstrata.

See http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=107295&sn=Detail.

Mining industry roars back to life

Share prices soared and hundreds of millions of dollars worth of stalled investments got the green light after Prime Minister Julia Gillard announced a deal on the controversial resources tax.

See http://www.abc.net.au/news/stories/2010/07/02/2943091.htm.

See http://www.abc.net.au/news/stories/2010/06/23/2934885.htm.

A precarious peace pact has been struck between the Australian mining lobbies and the Federal Government following the sudden departure of Kevin Rudd as Australian Labor Party Leader and thus the Prime Ministership. The argument over proposed higher tax rates on mining companies – including London-listed BHP Billiton and Rio Tinto – was one of the reasons for Rudd’s resignation.

See http://www.mineweb.co.za/mineweb/view/mineweb/en/page72068?oid=106788&sn=Detail&pid=102055.

Australian mining companies were first to suggest tax review

Mining companies now unhappy with Australia’s proposed 40 percent royalty tax were the first to suggest a review of payments to the state, chief economist at Australia’s trade commission Tim Harcourt said. Global miner Rio Tinto has said it would be forced to reconsider investing in Australia if the government insisted on a tax on so-called super profits, while Prime Minister Kevin Rudd has denied talk of a quick deal with miners over the tax row.

See http://www.mineweb.com/mineweb/view/mineweb/en/page504?oid=106304&sn=Detail.

S&P raises Rio Tinto outlook from stable to positive

Credit rating agency Standard and Poors’ positive outlook for Rio Tinto could be harmed by Australia’s proposed 40% resources super profit tax (but no mention in this article of the harm done by Rio Tinto…..).

See http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=106500&sn=Detail&pid=92730.

At first sight, it relates only to changes in methods of refining nickel, primarily in the manufacture of stainless steel. But, if verified, the process has profound (and negative) implications, both for the health of Chinese people, and for that of communities in Indonesia and the Philippines. Already saddled with proposals for massive new conventional nickel mines, citizens in these two south-east Asian countries may now well ask: will this technology displace the old, only to threaten different dangers with the new?

The development also has profound implications for London-listed BHP Billiton and Xstrata, both heavily invested in nickel.

See http://www.minesandcommunities.org/article.php?a=10184.

See http://news.smh.com.au/breaking-news-business/union-plan-to-starve-industry-of-labour-20100601-wts3.html.

Prime Minister Kevin Rudd’s proposed ‘super tax’ on miners is still causing the industry to vent its collective spleen in anger.

Xstrata have added to the list of companies promising to cancel expansion if the tax pushes through.

Rio Tinto is one of the latest companies to comment. At their delayed Australian AGM, CEO Tom Albanese told shareholders, “we are concerned that other countries may see this as something they want to try out, too.” That sounds almost like a challenge to other countries, many of whom have been reflecting on this issue. If other countries take this up as well, then where will the companies have to flee to? It appears that mining legislative issues are switching from the 90s ‘race to the bottom’ to a ‘race to the top’.

See http://www.minesandcommunities.org/article.php?a=10151.

See also: Australian mining tax “deeply flawed” BHP Billiton

According to the transnational miner, the Australian government needs to go back to the drawing board on its proposed tax. See http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=105811&sn=Detail&pid=92730.

See http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=105589&sn=Detail&pid=92730.

For background see http://www.mineweb.com/mineweb/view/mineweb/en/page38?oid=102270&sn=Detail&pid=92730.

This article also mentions Anglo American.

See http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=105361&sn=Detail&pid=92730.

See http://www.minesandcommunities.org/article.php?a=10118.

BHP Billiton chief executive Marius Kloppers said the Australian government’s proposed mining tax has cut the value of its proposed Pilbara iron ore merger with Rio Tinto, a newspaper reported.

See http://www.mineweb.com/mineweb/view/mineweb/en/page504?oid=105203&sn=Detail&pid=92730.

BHP could increase investments in Latin America due to Australian tax proposal

Multinational resources group BHP Billiton could look at increasing investments in Peru and other Latin American nations if the Australian government approves a proposed new tax on the mining industry.

See http://www.bnamericas.com/news/mining/BHP_could_increase_investments_in_Latin_America_due_to_Australian_tax_proposal/188085073.

Australia No.1 sovereign risk issue for mining – Rio Tinto

London-listed Rio Tinto said it is reviewing all investments in Australia due to a proposed new tax, describing the country as its No.1 sovereign risk concern and sending a weak Australian dollar even lower. Australia, which accounts for the bulk of Rio’s revenue from iron ore, coal and other commodities, had been considered a top safe-haven investment destination for miners hunting the raw materials to fuel Asia’s growth. But plans by Prime Minister Kevin Rudd to introduce a 40 percent tax on miners’ so-called super profits has sparked high-stakes political battle ahead of a general election later this year.

See http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=105316&sn=Detail&pid=92730.

Rio Tinto not against profit-based taxes for mining

Mining giant Rio Tinto supports the notion of a profits-based mining tax but feels Australia’s proposed 40 percent profits tax is too punishing, a senior executive said. Australia has angered miners with its plan, unveiled this month, to replace the current system of relatively low royalty rates on mine output with a national profit-based tax from 2012. Rio Tinto and rival BHP Billiton have taken the lead against the tax, attacking it as punitive and damaging to new projects, jobs and the nation’s investment reputation.

See http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=105164&sn=Detail&pid=92730.

See http://www.minesandcommunities.org/article.php?a=10108.