The plane was enroute from Yaoundé in the Republic of Cameroon to Yangadou in the Republic of Congo.

The flight was carrying nine passengers, predominately from Sundance Resources, who were visiting the Company’s Mbalam iron ore project in Cameroon and Congo and conducting high level meetings with various government representatives of both countries.

The Sundance Resources’ personnel confirmed as being on the plane included:

• Geoff Wedlock (Chairman)
• Don Lewis (Managing Director & Chief Executive Officer)
• John Carr-Gregg (Company Secretary)
• Ken Talbot (Non Executive Director)
• John Jones (Non Executive Director)
• Craig Oliver (Non Executive Director)
• Jeff Duff (Representative of Dynamiq, consultant to Sundance Resources)

The proposed new mining super tax, named the Resources Super Profits Tax (RSPT), has sure been getting its fair share of the news lately.

Personally, I am a firm believer in the less-tax-less-government makes for a more prosperous future.  I have had the privilege to travel to many other countries and see what works and what doesn’t.

There is no doubt about it in my mind – high taxing, bigger government scares companies away from investing. Less investment means less jobs.

There are a lot of arguments and counter-arguments going back and forth between the government to the mining industry. I thought that I would highlight the main arguments from both sides and let you decide.

Until next time,

Calvin

The Government’s Standpoint 

• Current royalties and taxes fail to collect appropriate returns from private companies extracting non-renewable resources that belong to the Australian people
• The mining industry asked that any additional taxation needed to be applied to profits rather than the resource so they only paid extra tax when they were making money – this tax does just that
• The RSPT provides a more efficient mechanism for colelcting a share of the returns to the community
• The RSPT will encourage greater investment and employment in the resources sector.

The government has produced a Fact Sheet that fully outlines their rationale. You can get your copy here:

Resource Super Tax Fact Sheet

The Mining Industry Standpoint 

• The mining industry is more than happy to pay its fair share of taxes
• The mining industry already pays its fair share of tax – $80 billion in the last decade
• Mining companies pay corporate taxes just like every other corporation, plus they pay royalties; these taxes and royalties already give an effective tax rate of over 40%
• The RSPT would raise the total effective rate to 58%, making it the highest tax rate in the world
• Our biggest competitors, Canada and Brazil have tax rates of 23% and 27-38% respectively
• Mining in Australia needs to be taxed at an internationally competitive rate
• Current mining operations should not be taxed retrospectively as these investments were made on the assumption of current tax rates.

Further details of the mining industry standpoint can be viewed at the Keeping Mining Strong website.

What is your opinion about the RSPT? Post your comments below…

It has been an amazing couple of weeks in politics that included a change of Liberal Party leaderhip and the ETS defeat.

I wonder whether the Climategate scandal timing may have had something to do with it.

Regardless of whether climate change is real, I am all for reducing energy consumption. It simply makes sense to use our energy sources wisely. However, I believe that the proposed ETS would have unnecessarily caused job losses and other major economic consequences to the Australian economy.

I believe that there are better ways of reducing energy consumption.

One of my biggest problems with these type of schemes is that they penalise Australia, while our competitors benefit. Countries like China that are taking Australian jobs talk about reductions but do not make any real change. The result: Australia becomes even less competitive against these low labour cost countries.

What real alternatives are there?

Firstly, rather than just create subsidies to offset costs, I believe that any emissions tax should be used directly to improve energy efficiency. Use the money to figure out how to more efficiently mine coal, generate power, etc.

Secondly, make the scheme dependent on other countries also reducing emissions. This way, Australia can commit to emissions reduction while still remaining competitive.

It will be interesting to see how this all pans out next year when the government is supposed to tackle the issue again.

Calvin Close
Australian Mining Reference

We are offering for sale our complete suite of Australian mining web sites. These include the following sites:

• Australian Mining Reference (www.miningreference.com)
• Mining Marketing (www.miningmarketing.com)
• The Mining Job Site (www.miningjobsite.com)
• The Mining Blog (www.theminingblog.com)
• The Mining Showcase (www.miningshowcase.com / www.theminingshowcase.com)

Included in the sale are the domain names, the complete web content and all the email subscribers.

Our websites rank on the first page of the main search engines for some of the best keywords like “mining companies”, “mining equipment”, and “mining directory”

We are also offering for sale the following domain names that are owned by us:

• www.ResourcesBlog.com
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• Up to 15,000 web visitors per month
• 3,000 companies listed in the Mining Business Directory
• Almost 3,000 subscribers to our miningreference.com email newsletter
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• Over 10,000 registered job seekers on The Mining Jobsite

Interested parties are requested to send an email to info@miningreference.com or call us on either of our contact telephone numbers:

• (02) 4016-4022 (Australia)
• (888) 601-9473 (USA)

This cut represents a $5 billion cut in export earnings for Australia.

You know that times are really not so good for the Australian mining industry when companies can take that sort of cut and be convinced that this is a good result for them.

When you look at the spot price hovering around US$60 per tonne, you realise that the companies might be right in their enthusiasm.

Although down 40% from last year, this year’s price will still be the second highest price paid by the Japanese companies. It is also still far higher than the contracted price just 2 years ago.

The slightly better that expected thermal coal prices being negotiated have given hope that the coking coal prices will not be hit as hard as previously expected.

Our iron ore producers are expecting a 30% cut in prices from the current US$100 per tonne.

Calvin Close
Australian Mining Reference

The government has release the Mid-Year Economic and Fiscal Outlook (MYEFO) which predicts that Gross Domestic Product (GDP) and jobs growth are both expected to slow significantly. However, Treasury has assessed that a recession is not in prospect.
(See full story on Forbes)

Yes. Australia is being affected by the global financial crisis.

So what about the mining industry?

Many people believe that the mining boom has peaked. Actually, it seems more like there is a “wait and see” approach being taken by some mining companies. Many projects have been put “on hold” while the mining companies assess potential drops in resources demand. Production cuts have also been announced by several mining companies. This has meant that many companies have already cut staff.

The recent announcement of China’s Economic Stimulus plan has caused shares in major Australian mining companies to rise on Monday.

Despite the downturn, the Minerals Council of Australia (MCA) has maintained that demand from China will continue at high levels. They are still predicting significant increases in jobs over the next 12 years.

It will be interesting to watch proceedings over the next few months.

The construction of the mine will create around 400 new jobs, with an expected 300 employees required for the ongoing operation of the site.

A further 700 employment opportunities will be created indirectly as a result of the development.

The Mangoola Coal mine will produce up to 10.5 million tonnes per year of run of mine ROM of both export and domestic quality thermal coal with an expected mine life of 18 years.

Mangoola Coal will generate over AUD35 million ($33 million) per annum for the NSW State Government through coal royalties and provide significant support to local infrastructure, employment and training projects through a Memorandum of Understanding with Muswellbrook Shire Council.

Peter Freyberg, Xstrata Coal Chief Executive, stated that, “Xstrata Coal is the largest producer of export coal in New South Wales, with a proven history of successful project development. We have the technical skills, experience and senior management in place to deliver projects on time and on budget, as demonstrated by the recent completion of our Liddell and Glendell open cut projects.”

At each stage of the Mangoola Coal project, Xstrata Coal will implement detailed environmental management processes to address energy conservation, air quality, noise and vibration, water resources, and any potential impacts to flora and fauna.

Mangoola Coal will produce coal for both the export and domestic markets in a 80:20 ratio over the life of the mine. An agreement for the first 12 years of domestic production is in place with Macquarie Generation (Bayswater and Liddell power stations). Export output will range between 6 million tonnes and 7 million tonnes per annum. All product coal will be transported by rail from the mine site to either Macquarie Generation or the port of Newcastle.

Major construction works will commence upon the issuance of the mining lease. Development consents and other approvals have been received.

The great thing about it is that the same system can also be used to transport workers to / from the mine, in many cases eliminating the need for expensive fly-in-fly-out (FIFO) transport.  The system can also be used to transport supplies to / from the mine.

Another major benefit for the mining industry is that this system can eliminate the need for expensive port loading infrastructure because the transport modules can load directly into ships.

This system is also an answer to some of the criticism received from the environmental movement.  The system can be installed with minimal earthworks and can cross sensitive environmental areas with minimal impact.  The system is also extremely fuel efficient.

The cost to install the system is about half the cost of installing a conventional railway line. If you combine the savings from line construction and eliminating the port requirements, the savings amount to hundreds of millions of dollars.  In some cases, this can mean the difference between proceeding or not proceeding with a new mine development.

Read more about the application to mining transport.

The same company has also developed a system for high speed passenger transport.

Imagine being able to travel from Sydney to Melbourne in less than 2 hours! Imagine doing it without all the hassles of airport check-ins and going through security.

Their inner city passenger transport solution will enable people to travel across the city at speeds of up to 110kph.  This type of system can be installed in just about any city because it is installed ABOVE the city.

For more information, go to the Alternate Transport website. The website has lots of images and even a few videos to watch.

Mike Sutherlin, Joy Global’s President and Chief Executive Officer said that the purchase of Continental would expand the range of products and services they can deliver to their customers, and was consistent with their strategy of adding related and highly synergised product lines. He added that Continental’s conveyor systems fit closely with their surface and underground and businesses, allowing Joy to leverage their strong global presence in both segments.

From other comments made, it appears that Joy is looking to further integrate their face mining systems with outbye conveyor systems in order to further improve system reliability.  If this truly happens, it would surely be welcomed by all longwall and development superintendents.

Let’s see how all this progresses.

Calvin Close
Managing Director
Australian Mining Reference

Further links:

Australian Mining Business Directory
 - Underground Coal Mining Equipment
 - Open Cut Mining Equipment
 - Hard Rock Mining Equipment
 - Conveyor Equipment

Previously, Centennial Coal completed the sale of its Anvil Hill development to XStrata for A$454 million.

Centennial is using the proceeds of both sales to reduce debt and for capital management initiatives.