New Market Research Report: Australia Mining Report Q4 2010

Sept. 20, 2010 - PRLog -- Mining Dispute Sees Rudd Ousted

Mining industry anger over a proposed 40% resource 'super profits' tax (RSPT) on all commodities mined in Australia was a major contributing factor to the shock ousting of Australian Prime Minister Kevin Rudd by his deputy Julia Gillard in June 2010. Now, Gillard is to face Liberal Party leader Tony Abbott (himself only in the job for nine months) in a snap August 21 election, where the mining industry will find itself centre stage.

One of Gillard's first acts as Prime Minister was to renegotiate the terms of the RSPT, which had previously been labelled as 'resource nationalism' by one leading mining company CEO. To that end, Gillard and her Treasurer Wayne Swan came up with a new tax deal, agreed with the major mining companies, which saw the 40% RSPT cut to a 30% levy, which would only be levied on profits made within the iron ore and coal mining sectors. However, small and mid-tier miners, who were excluded from these negotiations, remain opposed to this revised tax level. For his part, Abbott has said that he will scrap the tax if he is voted into office in August. At the present time, the polls are too close to call, but indications are that Labor may squeeze home for a second term.

Whatever the outcome of the election, we believe that the vast potential still offered by the Australian mining industry more than outweighs the temporary negative impact on sentiment that the RSPT has had in recent months. We believe that the mining industry would prefer a Liberal/National party coalition victory; however, Gillard has already shown that she can work effectively with the industry in the few weeks that she has held the top job. The challenge for Labor, if it wins on August 21, will be to ensure that the voices of smaller mining companies are heard, in order to strengthen the outlook for this segment of the mining industry.

Indophil Seeks New Suitor

Australian copper and gold miner Indophil Resources is now seeking a new buyer, following the decision by approved bidder Zijin Mining to pull out of an AUD545mn takeover deal in June 2010. Zijin had reportedly encountered obstacles in ensuring Chinese regulatory approval at the local level for the purchase. Indophil's key asset is its 37.5% stake in the Tampakan copper/gold deposit in the Philippines, one of the largest undeveloped copper/gold deposits in the world. As such, it is expected to attract new bidders over the coming months.

Major Copper Resource Announced At Hillside

In July 2010, junior copper explorer Rex Minerals unveiled a maiden resource estimate for its Hillside proect in South Australia. The inferred mineral resource estimate is 100Mt @0/7% Cu and 0.2g/t Au, which equates to 700,000 tonnes of contained copper and 650,000 oz of gold, according to Rex. This could make Hillside one of Australia's largest copper projects. Encouragingly for the company, the resource starts from some 10m below the surface and can therefore be open-pit mined initially. Moving forward, Rex intends to carried out further metallurgical and mining studies, alongside mining cost estimates, over H210.

Country Overview

Hosting a gamut of metals and minerals including iron ore, nickel, bauxite, copper, gold, silver, uranium, diamonds, zinc and coal, Australia is a world leader in mining. Australia lies within the top five for production of most of the world's key minerals. The mining industry is a significant contributor to Australian GDP.

Owing to its exceptional geology, Australia is home to some of the biggest names in the global mining industry. Multinationals operating in the Australian mining industry include locals BHP Billiton and Newcrest, Rio Tinto, and Xstrata.

Foreign investment rules are liberal and encourage inward investment. Mergers and acquisitions (M&As) are subject to scrutiny by the Australian Competition and Consumer Commission (ACCC). The country has well-defined regulatory bodies and a well-established legal system that can be described as investorfriendly. In the case of specific mineral exploitation, the authorities now consider uranium mining proposals on a case-by-case basis.

Industry Forecast

BMI is optimistic on the outlook for Australia's mining industry over our forecast period to 2014. We believe that growth can average 6.8% over the coming five years. Demand for Australian minerals will remain strong from Asian nations, notably China.

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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.