News

Resources companies aren’t doing Australia a favour by investing in the country, they’re doing it because there’s money to be made, even with an increasing government take. But the danger for governments with a propensity to fiddle with industry tax regimes is overestimating their willingness to pay. It’s easily overlooked when company bosses warn that changes to Australia’s fiscal regime will force investment capital offshore and make other jurisdictions more attractive that the country still has a lot going for it.

Western Australia has been toppled as the world’s top-rated mining investment destination but remains Australia’s most attractive jurisdiction. The Institute ranks the attractiveness of the world’s mining jurisdictions by measuring their practices, mineral potential and regulatory and fiscal policies based on a poll sent to nearly 2000 people in the mining industry. WA’s drop was blamed on a drop in its policy score, which shunted it from 4th to 10th last year, as miners “expressed increased concern over its taxation regime, uncertainty regarding environmental regulations and regulatory duplication and inconsistencies”, the Fraser Institute report said.

One of Australia’s leading energy analysts says the Federal Government’s changes to the Petroleum Resource Rent Tax means the nation has “lost its competitive advantage” in the lucrative LNG sector.Mr Kavonic warned the changes could lead to the gas industry — already reconsidering Australian investment after east coast policy intervention — thinking twice about the west coast now, too.

Prime Minister Anthony Albanese said he makes “no apologies” over the Federal Government’s Petroleum Resources Rent Tax changes. The Australian PM defended an overhaul of the contentious tax ahead of the May 9 Budget at a press conference in resources-rich WA during a pit stop on his way home from attending King Charles III’s Coronation in London.

WA Premier and Treasurer Mark McGowan will hand down the state’s budget on Thursday, with stronger-than-forecast iron ore prices and a larger share of GST revenues expected to drive WA’s operating surplus to as high as $4bn. Mr McGowan on Sunday confirmed there would be some cost of living relief, with the state’s own measures designed to accompany steps to be announced in Tuesday’s federal budget.

Rio Tinto chief executive Jakob Stausholm has spoken candidly about the miner’s pledge to reduce emissions, saying in hindsight he regrets setting a target for as soon as 2025. Mr Stausholm backed in the big miner’s commitment to playing its part in addressing climate change while taking questions about Rio’s plans to decarbonise at an event this morning, but said it had to be ‘realistic on what it takes’.

The federal government’s tax take is poised to hit its highest level in 15 years thanks to soaring resource sector profits and inflation pushing workers into higher tax brackets. Veteran budget watcher Chris Richardson expects the May 9 budget to reveal tax revenue as a share of the economy will reach 23.8 per cent next financial year, which will be the highest level of collections since 2008.

“Australia’s oil and gas industry is already delivering increasing returns to governments as part of a broad economic contribution that will almost triple to $16 billion in direct taxation receipts this financial year while employing 80,000 workers and spending $45 billion on Australian goods and services this year,” chief executive Samantha McCulloch said.

Takeover activity in the Perth Basin gas sector in the past few months has included Gina Rinehart’s Hancock Prospecting buying up explorer Warrego Energy for $438 million, while Chris Ellison’s Mineral Resources has acquired Norwest Energy. Earlier, in 2018, Japan’s Mitsui snapped up AWE, giving it 50 per cent of Waitsia. He said the tightening of the WA domestic gas market presents one of the most under-appreciated market shifts in Australia’s energy landscape in the last year, and is still flying below the radar of many investors.

Mr Iustini said engineering design teams were as busy as they had ever been, which was a signal for what’s coming next. “We see 2024 as being a really busy year for execution and construction of the big projects,” he said.
Likewise, Hancock Prospecting and its subsidiaries, Atlas Iron and Roy Hill Holdings, are focused on growth. The group’s latest project was the McPhee Creek mine, budgeted to cost $605 million. Through its recently formed HanRoy entity, the group is evaluating several growth options, including the Mulga Downs mine, with production capacity of 20 million tonnes per annum, and the Hardey mine.

Former prime minister Tony Abbott has hailed Shingo Yamagami as an “outstanding” diplomat, saying the Japanese ambassador has alerted Australia to prevalent dangers and risks. “The risk that we will no longer be a source of energy security to countries like Japan if we don’t continue to develop our coal and gas resources and the danger of Beijing’s aggression towards its neighbours and indeed the wider world,” he told Sky News host Peta Credlin. “In this sense, Yamagami-san has been one of the really outstanding diplomats.”