Over Regulation Driving Mass Exodus in Australia's Resources Sector

 

The New Trend for Primary Sector resource Companies operating in Australia is to go offshore seeking reallocating their capital to projects with less overhead cost and greater certainty.

2012 Has seen the introduction of a Carbon Tax (Carbon Trading System) and a Mining Tax which combined with a heavily reduced Iron Ore price and weakening demand has seen any new or planned venture on paper, look far less economical.

There has been an incremental shift in Australian Companies increasing profiles overseas where the cost of business are seen as being significantly less such as Papua new guinea and South Africa.

The Australian Governments Justification for the Mining Tax (Resource Super Profits Tax) are basically two fold:

The Commodities Prices are rising so fast the taxation system is unable to stay in-line with the super normal profits mining companies are experiencing during this resources boom.

Most of our mining companies are majority foreign-owned and are receiving a huge windfall at the Australian taxpayer’s expense.

The Carbon Tax will also progressively increase the costs of production capabilities for miners and primary resource companies in an indirect way through increased costs such as electricity which is one key input to mining and yielding primary resources, some to a break even and shut down point where the cost of production is outstripped by costs and economics uncertainty.

The outcome of these creeping legislation's are that incrementally Australian companies will and have been considering a more international approach as the disincentives to operate inside Australia grow to a level were companies will be forced into this position.

The eventuation is that the price put on commodities in Australia will ensure that they are plentiful for generations to come as the opportunity cost of mining in Alternate resource rich countries becomes too much. 

This Legislation is effectively creating commodities world where 3rd world countries seek out cheaper countries to do business in and in a way at least its almost like Australian Government was slow to catch on to Globalisation and outsourcing production to countries with cheaper labour and less Government Bureaucracy where businesses and economies thrive.

By Joseph Gale