Thursday, May 27, 2010

Sick of RSPT already

I wonder when the government's planning to get the legislation for it's Mining Tax through? (Or even whether it would pass the Senate). I'm getting a bit sick of hearing about it in the news - and the question that I always want to put to the mining company bosses you see interviewed is: will you STFU when the uncertainty is over? Journalists seem to be shocked and surprised that companies like Rio Tinto say they're re-evaluating all their projects. Of course they are!! They're likely to make less money on some, and ameliorate the risk on others (as the "tax" is also a rebate on losses). And of course no company is going to approve a huge new investment while the proposal isn't finalised and legislated.

The tax also seems to even out differences in (regularly changing) royalty regimes of the various states by offsetting royalty payments. This would seem to me to meet one of Rio's goals of lessening uncertainty. They say that the proposed tax is the greatest "sovereign risk" in the world for their business right now. But they don't say whether it'll go back to business as usual once (if?) the legislation is passed. Surely at that point it stops being a risk, and becomes an expense to be taken into account.

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