SearchRecent comments
Democracy LinksMember's Off-site Blogs |
a copper con .....from Crikey ..... What you won't learn about the Xstrata 'closures' from the media Canberra correspondent Bernard Keane writes: CCS, COAL MINING, COPPER MINING, WANDOAN, XSTRATA The media and the opposition would have you believe the fifth horseman of the Apocalypse, looking very much like Kevin Rudd riding on his RSPT, had gone into Mt Isa and wreaked havoc, in the wake of Xstrata's decision to suspend its Wandoan coal project and an extension to its Ernest Henry copper mine. It's garbage, and the cleverly tax-avoiding Switzerland-based empire has played this game before. Let's look at the facts of what they're claiming to do -- facts you won't get from the mainstream media today. The "$6 billion" Wandoan coal project - it's still in the planning stage and hasn't even received the requisite environmental approvals yet - isn't intended to produce coal for export. As Xstrata itself admits in its spruiking of the project, massive road, rail and port infrastructure upgrades are required if the coal could ever be exported. Instead, the project was dependent on the Wandoan Power project - a Carbon Capture and Storage initiative that is entirely reliant on federal government funding. The government is investing billions in trying to make the so-far commercially-unproven CCS technology viable, but it's not even yet clear if the Wandoan project will attract funding from the government, and won't be for quite some time. And as always when it comes to the mining industry, look at what they do, not what they say. Remember that huge $4.85 billion bid by the coal industry for QR's coal lines last week? That's the one where the bidders specifically said they were prepared to pay a premium -- using borrowed money -- for the infrastructure because they were so confident of 'future growth' in coal exports. Who's leading that bid? Who has such confidence in growth in coal exports that they're prepared, even in the light of the RSPT, to pay over the odds for infrastructure? BHP and Xstrata. Again, look at what these people do and not what they say, because when they open their mouths they lie. When it comes to the Ernest Henry copper mine, even Xstrata itself is confused. It says it's not proceeding with one extension, but it is with another. Ernest Henry will still be going for another decade, according to the company. The real reason why it isn't proceeding with its more expensive expansion of the mine at this point is simple: the copper price has tanked and doesn't look likely to recover any time soon, not while there are concerns about sovereign debt and banks in Europe and the Chinese government is trying to rein in growth. Nothing to do with the RSPT. How do we know? Well, Xstrata shut down a major copper operation in Canada back at the start of the year. Since then, the price of copper has fallen further. This isn't the first time that Xstrata has made these sorts of claims, though. In March last year, at the height of the CPRS debate, Xstrata confidentially told Malcolm Turnbull they wouldn't proceed with the Wandoan project if the CPRS went ahead. Turnbull, eager to score points off the Government, used the claim in question time, saying it was evidence the CPRS would cost thousands of jobs. An embarrassed Xstrata then had to back down from the claims, admitting the project wouldn't be substantially affected by the CPRS. In the 'perpetual present' of political coverage, of course, that's long been forgotten by journalists. As one former coal industry insider told Crikey: "this is a total con". Threatening to halt or delay projects was, they said, a common industry tactic, and was frequently used during the campaign against the CPRS. "This was all just tactical bullying and everyone in the industry knew that at the time." And in the mainstream media and lazy journalists, they have a willing ally. and then ..... Tax havens and cosy deals: the Xstrata story Canberra correspondent Bernard Keane writes: So what exactly is Xstrata? It's an outfit that rewards some close scrutiny. See, while Rio and BHP might be every bit the lying multi-national bullies that Xstrata is, at least they're actually genuine mining companies. But Xstrata makes more sense as a Swiss investment vehicle that has become a major force in mining around the world by acquisition, rather than real growth. The dominant (34%) shareholder in Xstrata is a privately-held outfit called Glencore. Glencore was founded and run by Marc Rich, the indicted tax evader and embargo-breaker who was notoriously pardoned by Bill Clinton at the end of his term in office. Rich sold out in the 1990s to two of his lieutenants, Ivan Glasenberg and Willy Strothotte. The CIA has accused Glencore of sanctions-busting deals with Saddam Hussein's Iraq, among other rogue states, and the company has a history of human rights controversies, particularly in South America. Xstrata has long been involved in attempts to de-unionise its Australian workforce and force them onto individual contracts (the Xstratafacts website details the company's ongoing campaign against its workforce). But Glencore has more than a proprietorial relationship with Xstrata. Strothotte is chairman of both Glencore and Xstrata, and Xstrata shareholders revolted in May against his re-election, with a quarter opposing him (CEO Mick Davis's generous remuneration package was also savaged). Glencore CEO Ivan Glasenberg is also on the Xstrata board. More particularly, Glencore extracts huge marketing agent fees from Xstrata, worth $80 million in 2008, and acts as Xstrata's distributor for a number of products (and in some cases collects fees regardless of whether it sells Xstrata products or not). The close relationship between Glencore and Xstrata was a key reason for a mooted merger with Vale falling over two years ago, with complaints from other Xstrata shareholders that Glencore had wrecked the deal. According to Xstrata's 2009 annual report, it gets only 26% of its revenue from Australasia, compared to more than 50% from the Americas. Despite its limited exposure to Australia, its share price fell 10% in May, significantly under-performing local miners with much higher exposures to the government's proposed RSPT. You might have noticed that, for all its vociferous attacks on the RSPT, Xstrata, led by its South African CEO Mick Davis, hasn't had much to say in the debate about effective tax rates. That might be because Xstrata is headquartered in Zug, a small canton in Switzerland. Zug is one of the tax avoidance capitals of Europe, boasting "some of the lowest tax rates available in any stable democracy". Glencore is headquartered there as well. Look at BHP's or Rio's annual reports and they produce figures showing they pay 30% tax on their global operations - which leaves out generous deductions and concessions they receive in Australia, but that's another story. Xstrata's figures show they pay 25% globally, courtesy of their use of a tax haven. It appears Glencore and Xstrata are very sensitive about tax. No wonder they'll say and do anything to ward off the RSPT.
|
User login |
Resources Tax & Industry BS
So Kev wants to pull a bit back from the resources industry for the cost of our resources and the added strain on infrastructure those industries place on the communities that service their people. Abbott wants to let the fat cats keep their money, spinning the line spouted by the big mostly foreign owned mining companies about how this will cost jobs. My favourite bit of BS is the part where these companies threaten to go get their ores elsewhere. Honestly, what a crock.
Kev and the ALP should stick to their guns on this one. However, I do believe the revenue from this tax should be split 50/50 between Canberra and the states from which the resources are extracted.
Why the Industry threats are BS:
Australia, being the oldest continent on earth, hasn't got mountains sitting on top of the huge deposits of mineral deposits. Whether it is iron ore, copper, nickel, ink, gold or yellow cake, it is all accessible via open pit mining.
Because there are no mountains of any serious obstacle, ore trains can be up to 7 mines long, making transport from mine to port easy and cheap, when compared to other regions.
Australian ores, especially those found in Western Australia, are some of the highest grade ores found in the world, meaning more usable product per tonne dug.
Location. Australia's largest customers are China & Japan. Again, shipping costs are lower than bringing ore from say Brazil.
Last, but not least, these resources belong first to the Traditional owners and the people of the State from which it is extracted.
These threats of loss of jobs, or putting projects on hold are easily dealt with, as part of the Resources tax itself, with the addition of the following provisos:
No Australian Citizen or Permanent Resident, nor anyone in a government subsidised apprenticeship program, may be laid off or made redundant before all visa'd temporary employees are laid off, and no visa'd workers may be hired or re-hired until all previously laid off Australian Citizen or Permanent Resident or apprenticeship program persons have been rehired or placed in suitable positions in the industry, and there is a shortage of suitable domestic employees. A goodly portion of these royalties should be used to increase the availability of suitable training for the industry.
Any 'postponed project' idle for 6 months must surrender it's lease where upon the project would become a worker run and managed project with royalties going to the shire infrastructure where the project is located.
When housing becomes an issue in mining towns to the point where locals can no longer afford to live in their own towns, it is time for these companies, and the government, to find ways to solve the problem, This is by far the best way. Royalties for Australia, Royalties for Regions, a fair go for the communities.
Odd Maude
here, here ...
Well said.
the case for the mining tax .....
from Crikey .....
Glencore and the cautionary tale of Zambia
Crikey Canberra correspondent Bernard Keane writes:
GLENCORE, MINING INDUSTRY, RSPT, TAXATION, XSTRATA, ZAMBIA
The parent company of Xstrata has been found to have systematically ripped off one of Africa's poorest countries, Zambia, by avoiding hundreds of millions of dollars in taxes through mechanisms like transfer pricing.
An audit carried out by the Norwegian office of global auditor Grant Thornton, at the request of the Zambian Revenue Authority, uncovered the tax-avoiding activities of Mopani Copper Mines, 76% owned by giant transnational commodities broker Glencore. Glencore domiciled in the Swiss tax haven of Zug. Mopani is controlled through another haven, the British Virgin Islands.
Glencore also controls transnational miner Xstrata (it too is domiciled in Zug), a key player in the defeat of the Rudd Government's RSPT.
During the hysterical campaign against the tax, waged primarily by BHP, Rio Tinto, Xstrata, the Minerals Council of Australia and News Ltd, Zambia was held up as a model for Australia to follow in its taxation treatment of mining. Zambia had introduced a windfall mining tax in 2008, but reversed it in the teeth of the Global Financial Crisis in January 2009. In June last year, Mark Cutifani of Anglogold Ashanti urged the government to learn the lesson from Zambia.
One of the ratings agencies at the heart of the GFC, Moody's declared that Zambia was "a cautionary tale" for Australia, in a statement approvingly quoted by the Minerals Council of Australia, especially when the Zambian Mines Minister said he hoped investors would leave Australia and switch to Zambia.
While that was happening, it turns out, Zambia's taxes were being rorted by Glencore, according to a report obtained by a group of NGOs. The Zambian Government has sat on the report and, according to the owni.eu site, which broke the story, a blogger who posted the report online was intimidated into removing it by the Government. The report found that Mopani had sold copper to Glencore at 25% of the international price, depriving the Zambian Government of 75% of liable tax revenue.
Mopani had also claimed a massive, but unexplained, rise in costs between 2006 and 2008, further cutting its tax bill. According to the report, the mining companies in Zambia actually pay less in tax than miners were paying in income tax.
In statements to Britain's The Observer newspaper, Glencore and Mopani both rejected the report and claimed that the audit had missed significant cost rises such as fuel. However, there did not appear to be a response to the central claim of transfer pricing. Mopani is said to have saved up to 76m pounds sterling a year in taxes, or about US$120m. The GDP of Zambia last year was only US$12.8b.
Glencore, which is about to list on the London and Hong Kong stock exchanges, is one of the world's biggest tax dodgers and owns more than one-third of Xstrata and shares senior board members with the company. Glencore extracts huge marketing fees from Xstrata and acts as its distributor.
Xstrata, like Glencore, is domiciled in Zug and pays significantly less tax than other miners operating in Australia.