Australia's New Resource Tax

Minesite (05/04/2010)
"So the new resource tax has now been announced by the Federal Government of Australia. The Henry Taxation Review has announced a swinging 40% tax rate, which, as Russell Garvey the tax director at BDO Corporate points out, risks undermining the competitiveness of Australia's mining sector in the global marketplace.

Fortunately, there is a resource exploration rebate that will make life easier for juniors, but problems will arise as they approach feasibility. As Garvey points out, 'A well-designed tax should never distort investment decisions. If a project is economically feasible pre-tax, it should remain so." A lot of sense there and hopefully the federal government will absorb these valid points as it moves through the discussion stage.

Unfortunately, politicians do not like discussions. This point is exemplified by the sudden request last week by the government of Colombia in South America for Greystar Resources to rework the Environmental Impact Assessment (EIA) for its Angostura gold project to take into account new legislation. The net effect of the new legislation would require a complete redesign of the proposed mine and indeed may render it nonviable. Greystar has already filed an appeal on the basis that the new legislation is being applied retroactively to it and that its existing EIA is fully compliant with the legislation in place when it was filed."

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