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.

When will UK follow suit?

Communities living in resource-rich countries won a historic victory today when the U.S. Congress passed landmark transparency legislation as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Once signed into law in the coming days by President Obama, the provision will require oil, gas, and mining companies registered with the US Securities and Exchange Commission (SEC) publically disclose their payments to governments for the extraction of natural resources on an annual basis.

See http://www.earthrights.org/campaigns/extractive-industry-transparency-provision-signed-law.

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.

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.

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=10095.

Rio Tinto ‘likely to shelve projects’ over Australian tax

Tom Albanese said the new tax was akin to a nationalisation of the mining industry. A resources analyst says news that Rio Tinto will review all its new capital projects in Australia in response to the government’s new mining super profits tax comes as no surprise.

See http://australianetworknews.com/stories/201005/2898028.htm?desktop.

Rio Tinto shelves billions in projects

RIO Tinto has raised the stakes in the mining industry’s fight with Australian Primer Minister Kevin Rudd over his new super tax by shelving its $11 billion expansion plans in Western Australia.

See http://www.theaustralian.com.au/business/mining-energy/rio-tinto-shelves-billions-in-projects/story-e6frg9df-1225862783233.

British-based companies involved in Tanzania include African Barrick Gold and African Eagle Ltd. South African based Anglo Gold Ashanti (which has a subsidiary listing on the London Stock Exchange) mis also active in the country.

See http://www.minesandcommunities.org/article.php?a=10087.

See http://www.mineweb.com/mineweb/view/mineweb/en/page39?oid=101110&sn=Detail&pid=92730.

See http://www.africafiles.org/article.asp?ID=23066.

Barrick is a Canadian company but London-based AXA Investment Managers UK Ltd had over $10 million invested in the company in 2007, BlackRock Commodities Income Trust plc has invested in the company, and the company also has connections with Millhouse Capital, controlled by London resident Roman Abramovich, and New City Investment Managers Ltd/NCIM (UK). (See From Money to Metals by Roger Moody, http://moneytometal.org/index.php/From_Money_to_Metals.)

National Advocacy Coalition on the Extractives (NACE), Sierra Leone

MEDIA RELEASE
Freetown, 4 March 2010

Dangerous draft mining contract about to be enacted, NACE warns

A mining agreement between the government and UK-based Company, London Mining, contains numerous concessions to the company which contravene the new Minerals Act. This makes a mockery of the new law which has taken years to finalise.

The mining agreement, relating to the iron ore deposit at Marampa, has already been ratified by Parliament having been signed off by the Ministry of Mines. NACE has just become aware of this process which appears to have been shrouded in secrecy. This new Act was meant to ensure that individual companies were not given special treatment in dubious deals – instead, the draft agreement appears to show that little has changed. It contains over a dozen discrepancies with the new Minerals Act.

The major concessions being offered to London Mining include:

Paying royalties on a percentage of the gross sales price of minerals mined after deducting Sales Tax, Value Added Tax, export duty and other levies. The new Minerals Act makes no such provision and requires companies to pay royalties simply on the market value of minerals mined.

An obligation to pay only 6 per cent in income tax for the first 10 years. The Minerals Act says nothing about giving companies concessions to reduce their income tax payments. They should be paying the standard rate of income tax for mining companies of 37.5 per cent.

A clause stating that if the government enacts different tax legislation during the term of the agreement – 25 years – the company will not be liable to pay those higher taxes. No such provision exists in the Minerals Act.

NACE is especially outraged that the draft agreement also contains a clause unheard of internationally which states that it takes precedence over the provisions of the Minerals Act. This in effect puts the company above the law.
The government is supposedly committed to greater mining revenue transparency by implementing the Extractive Industries Transparency Initiative [EITI]. The agreement completely undermines that commitment.
The biggest challenge facing the mining sector is to ensure that the people of this country benefit. NACE Coordinator Cecilia Mattia said:  “The new Minerals Act is a positive step in that direction but only if it implemented. If the London Mining agreement is allowed to proceed, other companies will negotiate their own special deals and the new Minerals Act might as well be thrown away”.
NACE calls on:
·    Parliamentarians to recall this agreement
·    The President to ensure that any agreement signed with London Mining is consistent with the Minerals Act
·    The Minister of Mines and Mineral Resources to provide a statement explaining how this contract could possibly have been drafted in this form
·    The British government to ensure that all UK Mining Companies abide by the new Minerals Act

For further information, contact NACE Coordinator Cecilia Mattia on 076602470 or 82 Soldier Street, Freetown.

See http://www.minesandcommunities.org/article.php?a=9925.

See http://www.minesandcommunities.org/article.php?a=9844.

See http://ipsnews.net/news.asp?idnews=50184.