Australian mining companies declared a huge win today (Friday) when the government announced the proposed mining "super tax" would be reduced, prompting some companies to reactivate shelved projects and reopen merger and acquisition talks.
Australia's Prime Minister Julia Gillard agreed on a compromise plan that would reduce the planned tax to 30% of profits from iron ore and coal, and 40% tax on oil and natural gas, down from the originally proposed 40% tax on all resources. The new plan, called the mineral resource rent tax, would also raise the tax's trigger level to profits that exceed a 12% rate of return instead of 6%.
"The reduction in the headline rate is an amazing concession," John Robinson, chairman of Global Mining Investments Ltd., told Bloomberg. "It's certainly better than I had expected."
Iron Ore
Article Index
Australia Reduces Mining "Super Tax," Reviving Profitability of Resource Sector
Question of the Week: Readers Respond to Money Morning's Afghanistan Mineral Wealth Query
The news that there is $1 trillion of Afghanistan mineral wealth hiding in the country's scarred and deserted landscape has global investors calculating how likely it would be for this incredibly poor country to transform itself into a natural-resources powerhouse.
It has also spawned debates about which nations should be given a piece of this vast apparent fortune.
The discovery - and its transformational potential - is mind-boggling: At $1 trillion, the estimated value of the mineral reserves is 100 times the size of Afghanistan's entire economy, estimated at $12 billion. And it's not just the dollar figures that could bring about change. Much of Afghanistan's economic activities involve drug-trafficking and terrorism. About 40% of the country's population lives below the poverty line, and 70% lives on $2 a day.
It has also spawned debates about which nations should be given a piece of this vast apparent fortune.
The discovery - and its transformational potential - is mind-boggling: At $1 trillion, the estimated value of the mineral reserves is 100 times the size of Afghanistan's entire economy, estimated at $12 billion. And it's not just the dollar figures that could bring about change. Much of Afghanistan's economic activities involve drug-trafficking and terrorism. About 40% of the country's population lives below the poverty line, and 70% lives on $2 a day.
We Want to Hear From You: Is Afghanistan's Mineral Wealth a Blessing or a Curse?
The news that there is $1 trillion of Afghanistan mineral wealth hiding in the country's scarred and deserted landscape has global investors calculating how likely it would be for this incredibly poor country to transform itself into a major global exporter.
It has also spawned debates about which nations should be given a piece of this potential fortune.
At $1 trillion, the estimated value of the mineral reserves is 100 times the size of Afghanistan's $12 billion economy. And it's not just the dollar figures that could bring about change. Much of Afghanistan's economic activities involve drug trafficking and terrorism. About 40% of the country's population lives below the poverty line, and 70% lives on $2 a day.
It has also spawned debates about which nations should be given a piece of this potential fortune.
At $1 trillion, the estimated value of the mineral reserves is 100 times the size of Afghanistan's $12 billion economy. And it's not just the dollar figures that could bring about change. Much of Afghanistan's economic activities involve drug trafficking and terrorism. About 40% of the country's population lives below the poverty line, and 70% lives on $2 a day.
Will Afghanistan's Mineral Wealth Bring the Nation's Rebirth or a Commodities Curse?
Overnight, Afghanistan has gone from being a political pariah to one of the most significant, and potentially richest, countries on the globe. But can the rocky, war-torn desert - known mostly for harboring terrorists and exporting opium - be reborn as a major commodities exporter?
U.S. geologists have found some $1 trillion of untapped mineral deposits in Afghanistan, The New York Times reported Sunday. Afghanistan's mineral wealth includes large caches of iron, copper, gold and lithium that could turn the country into one of the most important mining centers in the world.
Think of Australia, Canada, and Latin America. That is the league into which these geographical revelations have thrust Afghanistan.
"There is stunning potential here," General David Petraeus, commander of the United States Central Command, told The Times. "There are a lot of ifs, of course, but I think potentially it is hugely significant."
Those "ifs" include ongoing warfare, a lack of infrastructure, and more than a little political corruption. But the upside for the country is enormous.
While U.S. officials estimate the potential value of Afghanistan's mineral wealth at $1 trillion, President Hamid Karzai said last month during a visit to Washington that his country's deposits could be worth three times as much.
So why did it take so long for this information to surface?
U.S. geologists have found some $1 trillion of untapped mineral deposits in Afghanistan, The New York Times reported Sunday. Afghanistan's mineral wealth includes large caches of iron, copper, gold and lithium that could turn the country into one of the most important mining centers in the world.
Think of Australia, Canada, and Latin America. That is the league into which these geographical revelations have thrust Afghanistan.
"There is stunning potential here," General David Petraeus, commander of the United States Central Command, told The Times. "There are a lot of ifs, of course, but I think potentially it is hugely significant."
Those "ifs" include ongoing warfare, a lack of infrastructure, and more than a little political corruption. But the upside for the country is enormous.
While U.S. officials estimate the potential value of Afghanistan's mineral wealth at $1 trillion, President Hamid Karzai said last month during a visit to Washington that his country's deposits could be worth three times as much.
So why did it take so long for this information to surface?
The Winners and Losers in the 'Commodities New World Order'
In the "commodities new world order," commodity producers will be king.
Investors who need proof need only consider recent events. Iron ore prices are at record levels, and the annual-price-setting arrangement has broken down. Venezuela President Hugo Chávez has signed "dark side" agreements with Russian Prime Minister Vladimir Putin for Russian companies to develop Venezuela's oil-and-mineral resources. China may have invested $1 trillion or so in U.S. Treasuries, but the Asian giant's only truly successful investment so far has been the 17% stake it took in Canadian-resources player Teck Resources Ltd. (NYSE: TCK).
Welcome to the commodities new world order. These events serve notice that - as we put the global financial crisis behind us - the commodity "haves" will set the agenda ... while the commodity "have nots" will fall farther and farther behind.
Investors who need proof need only consider recent events. Iron ore prices are at record levels, and the annual-price-setting arrangement has broken down. Venezuela President Hugo Chávez has signed "dark side" agreements with Russian Prime Minister Vladimir Putin for Russian companies to develop Venezuela's oil-and-mineral resources. China may have invested $1 trillion or so in U.S. Treasuries, but the Asian giant's only truly successful investment so far has been the 17% stake it took in Canadian-resources player Teck Resources Ltd. (NYSE: TCK).
Welcome to the commodities new world order. These events serve notice that - as we put the global financial crisis behind us - the commodity "haves" will set the agenda ... while the commodity "have nots" will fall farther and farther behind.
To discover the identities of the new-world-order winners – and losers – please read on...
Historic Agreement Ends 40 Year Old Iron Ore Benchmark as Miners Get Short-Term Pricing Contracts
In a historic moment for commodities markets, two of the world's largest iron ore producers, Vale SA (NYSE ADR: VALE) and BHP Billiton Ltd. (NYSE ADR: BHP) signed short-term contracts for record prices with Asian steel mills that effectively replace a 40-year-old system of setting prices annually.
The landmark move by Vale and Anglo-Australian BHP ended the annual benchmark system when they signed new short-term deals linked to quarterly prices on the spot market, with the Brazilian company winning a 90% increase. Another large iron ore producer, Rio Tinto PLC (NYSE: RTP) has yet to sign any new contract, but is expected to soon follow.
The primary mineral used in steel, iron ore directly affects steel prices and the cost of everyday goods, including refrigerators, cars, and washing machines. That made the recent negotiations one of the most important issues for the global economy and commodity markets.
The landmark move by Vale and Anglo-Australian BHP ended the annual benchmark system when they signed new short-term deals linked to quarterly prices on the spot market, with the Brazilian company winning a 90% increase. Another large iron ore producer, Rio Tinto PLC (NYSE: RTP) has yet to sign any new contract, but is expected to soon follow.
The primary mineral used in steel, iron ore directly affects steel prices and the cost of everyday goods, including refrigerators, cars, and washing machines. That made the recent negotiations one of the most important issues for the global economy and commodity markets.
Guilty Plea by Rio Tinto Execs Shines Light on Complexity of China's Iron Ore Market
When four Rio Tinto PLC (NYSE ADR: RTP) executives stunned observers by pleading guilty to bribery charges in a Shanghai courtroom, it brought to light the unorthodox and complicated nature of doing business in China's iron ore industry.
Unlike corrupt transactions in other resource-rich countries where customers often receive bribes or kickbacks in exchange for arranging lucrative contracts, in China just the opposite is often the case.
The Rio Tinto executives, for instance, were accused of receiving bribes in return for delivering supplies of highly-desirable iron ore - the key commodity in China's burgeoning steel-making industry.
The four executives admitted receiving $13.5 million (92.18 million yuan) between them in bribes, China's state news agency Xinhua reported, citing court documents. They could face up to 20 years in prison.
But the gist of the story revolves around China's chaotic iron-ore trading system.
Unlike corrupt transactions in other resource-rich countries where customers often receive bribes or kickbacks in exchange for arranging lucrative contracts, in China just the opposite is often the case.
The Rio Tinto executives, for instance, were accused of receiving bribes in return for delivering supplies of highly-desirable iron ore - the key commodity in China's burgeoning steel-making industry.
The four executives admitted receiving $13.5 million (92.18 million yuan) between them in bribes, China's state news agency Xinhua reported, citing court documents. They could face up to 20 years in prison.
But the gist of the story revolves around China's chaotic iron-ore trading system.
Iron Ore Negotiations Reach an All-Too-Familiar Impasse
Iron ore negotiations have ground to a halt - again.
Iron ore producers and consumers were so far apart last year that negotiations on pricing broke down entirely. No price benchmark was reached between major Australian iron ore miners and China's steel mills.
Instead, steelmakers resorted to buying their iron ore from smaller producers on the volatile spot market. And they may have to do the same thing again this year.
That's because iron ore producers - led by Brazil's Vale SA (NYSE ADR: VALE) and Australian juggernauts BHP Billiton (NYSE ADR: BHP) and Rio Tinto PLC (NYSE ADR: RTP) - are reportedly looking for an increase of as much as 90% in the benchmark price.
"The negotiations are difficult. These miners hope for a large rise" in the 2010 benchmark price of iron ore, said Deng Qilin, the chairman of both the China Iron and Steel Association and the Wuhan Iron & Steel Group. "We can't digest the pressure of what they're asking us."
Iron ore producers and consumers were so far apart last year that negotiations on pricing broke down entirely. No price benchmark was reached between major Australian iron ore miners and China's steel mills.
Instead, steelmakers resorted to buying their iron ore from smaller producers on the volatile spot market. And they may have to do the same thing again this year.
That's because iron ore producers - led by Brazil's Vale SA (NYSE ADR: VALE) and Australian juggernauts BHP Billiton (NYSE ADR: BHP) and Rio Tinto PLC (NYSE ADR: RTP) - are reportedly looking for an increase of as much as 90% in the benchmark price.
"The negotiations are difficult. These miners hope for a large rise" in the 2010 benchmark price of iron ore, said Deng Qilin, the chairman of both the China Iron and Steel Association and the Wuhan Iron & Steel Group. "We can't digest the pressure of what they're asking us."
Iron Ore Proves to be the Most Coveted Commodity in the Pacific
By Jason Simpkins Associate Editor There has been little said about BHP Billiton Ltd.'s (BHP) attempted takeover of Rio Tinto PLC (RTP) in recent months, but the proposal is far from dead. In fact, rumors that BHP may increase its bid have brought about even more speculation that China's largest steelmakers will further enter the […]
India Stock Soars with Reliance and Tata Steel Out in Front
By Jason SimpkinsStaff Writer India's benchmark stock index yesterday eclipsed the 19,000 level, the first time that's happened, The Associated Press reported. The Bombay Stock Exchange's 30-share Sensex peaked at 19,059, a 639.6 point gain and a new all-time high. The Sensex has soared by 1,000 points in just five trading sessions, similar to the […]
China and Japan Digging Up A Skirmish 'Down Under'
By Jason Simpkins Staff Writer Murchison Metals, a company heavily backed by Japan-based Mitsubishi, has launched a hostile takeover of Midwest Corp., a company backed by Sinosteel, a state owned Chinese entity. The maneuver underscores a long-standing rivalry between the two nations, one that sees the two Far East juggernauts squaring off in a bid […]
- FACEBOOK COMMENTS