Miners welcome Argus panel recommendations on royalties

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Miners welcome Argus Panel recommendatiosn

Miners welcome Argus Panel recommendatiosn

By Matt Chambers and Sarah-Jane Tasker

MINERS have applauded a government advisory group’s concession that says royalty hikes should be creditable against the federal mining tax.

But the miners have been more cautious on some of the 93 other recommendations.

The response to a report handed down yesterday by the resource tax policy transition group chaired by Resources Minister Martin Ferguson and former BHP chairman Don Argus was mostly positive, and had the effect of almost silencing previously vocal opposition from smaller coal and iron ore miners.

Small miners did not get all the concessions they had loudly called for, but magnetite iron ore miners said the recommendations were a big improvement on the mineral resources rent tax agreement negotiated in June by the government with mining giants BHP Billiton, Rio Tinto and Xstrata.

Rio Tinto Australia managing director David Peever said he was pleased the policy group had recommended that all current and future royalties should be creditable against minerals tax liabilities.

In October, the Gillard government provoked the ire of the big miners when it said it would not credit future royalty hikes, despite the agreement saying all royalties would be covered.

As well as recommending future hikes be covered, the seven-person policy group — which had four industry representatives — said measures should be put in place to ensure state and territory governments did not have incentives to increase royalties on coal and iron ore.

The recommendation is in line with early November comments by Mr Ferguson that the government believed the states needed to be brought in on the deal to solve the royalties problem.

He said infrastructure funding could be used as a lever to stop Western Australia and Queensland raising royalties.

Minerals Council of Australia chief executive Mitch Hooke, who represents the big miners, declared the transition group had ended the royalties debate.

“It is imperative that this and other key design features of the MRRT are enshrined in forthcoming legislation and not deferred to regulation,” Mr Hooke said.

He applauded a recommendation that the taxing point be almost immediately after the ore was taken out of the ground — before any processing — but said he was unhappy with changes to starting base deductions and limits on transferring losses between coal and iron ore projects.

Magnetite miners Gindalbie Metals and Grange Resources both said they were disappointed they were still included in the tax but that moving the point of tax so close to the mine meant there would be little impost.

Magnetite ore has lower iron content and needs to be upgraded to make it suitable for steelmaking, so it is heavily processed before shipping.

“But they are only recommendations, so the issue we have now is how long it takes to go through the government because we need that uncertainty removed,” Gindalbie managing director Garret Dixon said.

Association of Mining & Exploration Companies chief executive Simon Bennison, who represents the smaller miners, said he was disappointed the transition group had not heeded requests to raise the $50m minerals tax profit threshold to $250m.

Instead, smaller miners will gradually be exposed to the minerals tax when their profits hit $50m and will not feel the full force of it until they reach $100m.

“It is still a very complicated piece of taxation,” Mr Bennison said.

Source: www.theaustralian.com.au