Media as usual show no understanding of resources industry

I see the resources industry is as usual under attack by the MSM and left biased think tanks which has been going on for decades. This article claims royalties are not a tax and resource companies should not group tax + royalties when showing what they pay Govts. Some say royalties are just a cost input, like Coca Cola buying sugar. Well when you think calmly the two things are very different. If you were a business requiring sugar you might be able to buy from this or that supplier around the world and haggle the best price – or even set up your own sugar plantations to supply your own sugar – or you might seek to use a sugar substitute – or even seek to use less sugar – you have choice.
Not with minerals – you pay the royalty to a State Govt that can hike the rate at will. But there is a worse misunderstanding. The State Govt never “gave our minerals” to the mining company. The State (with rare exceptions) does not know exactly where the minable orebodies are. Some resources company had to conduct expensive and risky mineral exploration for probably the best part of a decade – with no guarantee of discovering a payable orebody – all the while badgered by green and red tape from multiple idiot Govt Depts – with long suffering shareholders periodically dipping into their savings to raise money. Thats the reality of mineral exploration and out of that process many companies go broke, a few minable orebodies are found, then Govt holds out their hand for a royalty on production and now people who are anti the resources industry say the royalty is not similar to a tax. Spare me.
BTW I am not in favour of companies who do business in Australia yet set up entities outside Australia with the aim to reduce tax here.

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January 22, 2018 at 08:29PM

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