Subscribe for 12 months with recurring billing - $199

Buy 12 months of subscription time - $199


Search Uranium Stocks
Uranium Price
Our RSS Feed

Uranium Updates

Enter your email address:

Follow Us on Twitter
« Hyperion Power Generation (Mini Nuke) Update | Main | Carmel Daniele: Put Cash in Colombia’s Oil and Brazil’s Iron »

Australian Miners not best pleased with proposed 40% tax

Map of Australia Mines 06 June 2010.jpg

One of the risks to investment in the mining sector is that commonly known as geo-political risk, which has now cast its dark shadow over Australia as the Rudd government look to raise more money from one of her booming enterprises.

We kick off with a snipit from the BBC as follows:

Mining group Xstrata has halted investment in two projects in Australia because of the government's proposed new tax on mining profits. It said it was shelving investment worth 586m Australian dollars ($500m; £338m) in two mines in Queensland. The investment is part of a planned A$6.6bn development in both of the projects, which Xstrata said would have created 3,250 new jobs. Australia's government is planning a 40% tax on mining profits from 2012.

Last month, Australian iron ore miner Fortescue Metals threatened to abandon $15bn (£10.2bn) of new projects unless the plans for the mining tax were watered down or axed.

Bad news travels fast as we can see in this article from Xinhua:

CANBERRA, June 5 (Xinhua) -- The federal government's 61 billion dollars (50.3 billion U.S. dollars) Future Fund called for the proposed mining super-profits tax to be completely revamped or abandoned because it is a risk to investment and a short-sighted use of the nation's resources, local media reported on Saturday.

David Murray, the former Commonwealth Bank chief executive who is the chairman of the Future Fund, on Friday joined a chorus of business leaders decrying the design and implementation of the resource super-profits tax.

Murray described the mining tax as significantly flawed, saying it robbed future generations and represented a risk to Australia's international investment reputation.

In an interview with Business Spectator, Murray said that if Australia could not "achieve a design that does not penalize the existing projects -- that's a sovereign risk issue and a design that does not discriminate between recurrent spending and long- term intergenerational wealth creation -- if those things can't be done, the tax should be abandoned."

Murray also said it did not matter in the longer term if the budget were returned to surplus in three or four years' time and that "this tax could cause more trouble". "It's a long-term tax being applied to a short-term purpose, really, that's where the problems arise," Murray said.

An overview is provided by as follows:

Australia is a major global producer, containing 26% of the world's reserves. It is also the world's second largest producer after Canada, with mine production touching 8,931 t of Uranium in 2003. Exports in 2003 were estoimated at 9,614 t valued at A$398 million.One of Australia's largest producers is Energy Resources Australia (ERA), a subsidiary of Rio Tinto. ERA's operates the Ranger mining operation as well as developing the Jabiluka prospect in the Alligators River region, east of Darwin in the Northern Territory. However, the Jabiluka development has run into several problems with environmental agencies.

Three uranium mines operated in Australia in 2003: Ranger open pit (5,065 t in 2003), Olympic Dam underground mine (3,176 t in 2003), and the Beverley (689 t in 2003).

During 2003, 9.0 Mt ore were mined at Olympic Dam and the processing plant treated 8.4 Mt ore with an average grade of 2.4% Cu and 0.63 kg/t of uranium. The Beverley ISL mine was extended from the North orebody into the much larger Central orebody and plant capacity expanded to include a third train of ion-exchange columns..

The Western Australian Government has prohibited the mining of uranium for nuclear purposes from any mining lease granted after June 2002. The policy was ratified with an amendment to the Mining Act, which prohibits the mining and export of uranium for nuclear purposes. There are no uranium mines in Western Australia, but large deposits occur at Kintyre and Yeelirrie.
Since 2006 40 percent of the world's known uranium reserves are found in Australia.

As investors in uranium stocks we can only hope that something can be worked out that does not derail the mining industry altogether, taking uranium with it.

Have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:

On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.

On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.

Accumulated Profits from Investing $1000 in each OPTIONTRADE signal 14 May 2010.jpg

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more. have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

PrintView Printer Friendly Version

EmailEmail Article to Friend

Reader Comments (5)

I thought that Western Australia lifted the ban on uranium mining. Mega plans to open a mine in 2012.

June 6, 2010 | Unregistered CommenterDonnie McGean

Is the article out of date ? - I thought the new Western Australian Govt elected Sep 2008 had reversed the ban on uranium mining.

June 6, 2010 | Unregistered CommenterWarwick Hughes

Donnie and Warwick you are both correct:

THE West Australian Government has formally lifted the state's controversial ban on uranium mining and sought legal advice on overturning an exclusion clause written into 1475 existing mining leases issued since 2002.

Premier Colin Barnett said all leases issued from today would include a green light for uranium mining, fulfilling an election commitment to allow Western Australia to capitalise on massive uranium deposits stretching from the Pilbara to the Goldfields.

# November 18, 2008 12:00AM

June 7, 2010 | Unregistered CommenterUranium Stocks

About three (3) years ago, the Chinese bought interest in an Australian company that was going to explore for uranium in Tanzania. Seems there was a timetable for 2010 or 2012 for them to know if it was deliverable or not. If my memory is correct, it is Uranex out of Australia but they do not mention anything about the Chinese on their website. Would you happen to know what other company that would be or if it is Uranex?

Thanks and I look forward to your update - real insightful articles when you'll interview some of the major players like you do.

Keep up the good work. Some of us really believe in this source of energy and maybe all our patience will pay off and we can make this world different.

June 8, 2010 | Unregistered CommenterNelson

Interesting question Nelson. I have followed Uranex UNX from 2006
- the Chinese connection was four years ago - there was a "letter of intent" for 24 months with CNNC in April 2006. I have been checking for an hour or so and have seen no evidence that CNNC ever "bought in" to a shareholding UNX. Can not see any announcement marking the end of their interest. There are a couple of people I can ask.

June 8, 2010 | Unregistered CommenterWarwick Hughes

PostPost a New Comment

Enter your information below to add a new comment.
Author Email (optional):
Author URL (optional):
Some HTML allowed: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong>