BHP pulls out of Olympic Dam expansion

[strongy1986]

Yes people placed bets on Whyalla.
However Whyalla hasn't seen any capital growth in the last 5 years so I cant see this burning anyone unless they paid too much for the property. There hasnt been a boom there yet and as such there will be no bust.

As of today there is only 30 houses for rent in a town of over 20,000. Rents have increased significantly in the past 3 months without Olympic dam.

It will go ahead one day but in the meantime I still have a property with a good rental yield in a town where rentals are scarce. Still happy with my investment.

 

[Dazz]

BHP Billiton Chairman, Jack Nasser, was quoted in April saying that:

“While governments have the right to make tax and royalty decisions, those decisions have repercussions.”

“Attacking individuals and specific industries doesn’t build confidence in our country – nothing good comes from this. It is particularly troubling when these attacks are directed at the resources sector, a part of the economy that has the potential to continue growing, creating jobs for many more Australians.”​

I guess the Tasmanians and South Australians will need to wait a bit longer for their "spreading the mining boom bonus" a bit longer.

I'm not surprised.

These Labor Govts really do have no clue how to facilitate business.....but then as unionists, no-one should expect anything better. As a job lot, they simply don't have any experience.

I see the spin boys for the SA Labor Govt were straight into the @$$ covering mode.....

“As BHPB have made clear today, this decision is based on global factors quite outside our control - South Australia and the Commonwealth have done everything in our power to provide the circumstances for the project to proceed - a point acknowledged by BHPB.​

Phew.....we can all rest easy....it was all Greece's fault. Nothing to see here folks.


I wonder what changed BHPB's tune between April & Aug.....or maybe the spin boys for the SA Govt aren't quite telling it the way BHPB exactly said.

I guess no-one here was in the room, so we'll never know. We'll just have to take the SA Labor Govt's word for it.

 

[Peter 14.7]

Dazz, excellant post.

Ignoring the MRRT or not this decision is bad news.

At the very least, for 2 years plus this decision puts back in the pocket of BHP millions of $ they would have put NOW in the pocket of employee, contractors, and consultants.

Who would then have spent it on cars, food, homes, holidays and given 30% in Income Tax to the Fed Gov.

The cars would put money into factory workers pockets in VIC. The food into farmers across AUS. The holiday employ Qld resort workers who all then pay 30% Income tax to the Government.

Then the Government takes the tax and pays it as welfare to Greenies in Tasmania living ecologically (read no paid work, all cash) who now has the income and time to travel to SA to protest Uranium Mining.

At the worst, the project is shelved so long technology and overseas competitors over take us and establish mines cheaper thereby making the expansion of this mine uneconomical, forever. OR BHP takes there $ and invests overseas in the same mines put the above mentioned $ in the pockets of Governments and Workers in Brazil, China, African Russia.

Any way you cut, Aussies are screwed a little or a lot.

No happy, Peter 14.7

 

[Aaron_C]

It's ok fellas we got the $1.5bn surprlus to cover the investment shortfall in Olympic Dam.

 

[eKwatee]

I wonder if Terry Ryder is reviewing his Hot Spots after this news?

 

[pieman]

I wonder what changed BHPB's tune between April & Aug.....or maybe the spin boys for the SA Govt aren't quite telling it the way BHPB exactly said.

BHP has never in the past been scared of criticising the federal government before, why would they stop now? Marius Kloppers had an opportunuty to rip into them with the announcement, instead we got this...
As you know, the tax environment for this particular project has not changed at all since we started working on it six or seven years ago. The MRRT only covers coal and iron ore, not copper, not gold and not uranium, so the tax situation for this project has not changed.

Abbott got found out on the 730 report last night, as again he didnt do his research and looked a tool for trying to blame it on the CT.
He hadnt even read the BHP statement.

 

[oracle]

As you know, the tax environment for this particular project has not changed at all since we started working on it six or seven years ago. The MRRT only covers coal and iron ore, not copper, not gold and not uranium, so the tax situation for this project has not changed.

Even if copper, gold and uranium are not included in the current version of MRRT. Based on what the Government has done over the past 5 years. Resources companies will definitely be wary about the Government changing rules as soon as they can sense super profits being made from copper, gold and uranium.

So I bet, BHP or any resources company in Australia will factor potential changes to tax laws into their project hurdle rates before they go ahead and approve new projects.

Any way you cut, Aussies are screwed a little or a lot.

No happy, Peter 14.7

Aussies just have to buy shares and be part owner of this business and be pleased to know their company just made $15B net profit or $17B (excluding one off charges). Put in another way would be $41m each and every day including weekends and public holidays

Cheers,
Oracle.

 

[jackbak]

Noted. Which is even more alarming as I was commenting more generally on the belief that Mining was a never ending magic pudding of tax.

We are going to have a hard landing.

Regards

Peter 14.7

BHP have shelved it before and they will shelve it again. Lats time the did it Howard was in charge. And it's only delayed while they look for a "new and cheaper design". It will happen one day, but at the moment resource prices are dropping - and despite what many would like to think - that's got nothing to do with Swan...

 

[Peter 14.7]

BHP have shelved it before and they will shelve it again. Lats time the did it Howard was in charge. And it's only delayed while they look for a "new and cheaper design". It will happen one day, but at the moment resource prices are dropping - and despite what many would like to think - that's got nothing to do with Swan...

Hi Jackbak

I think you have missed my point.

Mr Swan set the Budget on projected income. All income, including GST, Income Tax, etc... With such a major project no going ahead now, that means income needed now, to achieve the $1.5BN surplus and fund the promises made are not going to be there. That is not his fault but what is his fault is that every economist and his dog said "this budget surplus of a razor thin $1.5BN is based on no new costs arriving, every growth input happening and commodity costs continuing to soar" If any of those fall over, it is stuffed.

That is my point.

In 2007 we had cash in the bank, we wasted that and more on solar panels, FHOG, insulation and school hals that don't work as school halls. Now we are in debt and we are spending money we don't even have on NBN.

If we are individuals lived like this we would all be bankrupt.

I would respect Labor move if they were honest and fessed up and when Gillard came in she said "lesson have been learnt" but no, they were not. This Government is still not honest and they are in charge, not the opposition.

I repeat, we are in for a hard landing.

If China goes quiet, we are in for a crash landing

Regards Peter 14.7

 

[Ausprop]

hopefully this may save us from some of the interest rate rises next year??

this announcement is a wealth transfer from SA to the south east. A shame as SA could do with this project

 

[jackbak]

Hi Jackbak

I think you have missed my point.

Mr Swan set the Budget on projected income. All income, including GST, Income Tax, etc... With such a major project no going ahead now, that means income needed now, to achieve the $1.5BN surplus and fund the promises made are not going to be there. That is not his fault but what is his fault is that every economist and his dog said "this budget surplus of a razor thin $1.5BN is based on no new costs arriving, every growth input happening and commodity costs continuing to soar" If any of those fall over, it is stuffed.

That is my point.

Regards Peter 14.7

I have to admit I haven't studied the budget in great detail, but I could almost guarantee you that the Olympic Dam expansion would not have been factored into next years budget. Firstly, because this is a project that was never a certainty to go ahead - there has been delay after delay after delay. And secondly, the $30b that BHP was projecting for expansion would have taken up to a decade to spend.

Jack

 

[Peter 14.7]

I have to admit I haven't studied the budget in great detail, but I could almost guarantee you that the Olympic Dam expansion would not have been factored into next years budget. Firstly, because this is a project that was never a certainty to go ahead - there has been delay after delay after delay. And secondly, the $30b that BHP was projecting for expansion would have taken up to a decade to spend.

Jack

With due respect this has already has had an immediate impact. Here is an excerpt from recent interview and a public statement from BHP:

BHP

"We want to find the right solution to unlock this resource," said Mr Kloppers.

However, BHP immediately began to lay off workers as it put the project on the backburner and as its existing underground mine cuts back because of lower commodity prices.

Read JOB going NOW. Means people getting the dole and not paying income tax.

THE THE SA LABOR PREMIER

South Australian Premier Jay Weatherill said the decision was an "enormous disappointment".

The indenture agreement between the South Australian Government and BHP will lapse on December 15, so any future mine expansion plan will need to be renegotiated, including the company's generous 45-year deal on royalties.
"The community will be expecting us to learn from our experience," Mr Weatherill said.

The expansion had been factored into the State Budget but Mr Weatherill said it was too early to quantify the loss to the SA economy.

Which is political speak for OMG it is so huge we have no idea.

Regards Peter 14.7

Read more: http://www.news.com.au/business/com...y-fnda1bsz-1226455884519#ixzz24KsdjmZErepsnet this has and immediate impact

 

[eKwatee]

I was lead to believe that BHP couldn't claim the costs associated with expanding the mine as a tax deduction until the section being expanded started to generate a profit?

 

[Tony3008]

Resources companies will definitely be wary about the Government changing rules as soon as they can sense super profits being made from copper, gold and uranium.

If you believe the polls and Tony Abbott, next year will bring in a coalition government with such a landslide majority that it will be in power for a decade, cancelling the MMRT and CT as soon as it comes to office. So why cancel a mining project if tax is the issue? (a) Because tax isn't the issue; or (b) because they don't believe that TA would deliver a more mining-friendly environment that they currently enjoy. For myself I suspect the issue is that there is so much capacity in the pipeline (as with Melbourne CBD/Docklands flats) that once it comes on stream prices will tumble.

 

[Aaron_C]

If you believe the polls and Tony Abbott, next year will bring in a coalition government with such a landslide majority that it will be in power for a decade, cancelling the MMRT and CT as soon as it comes to office. So why cancel a mining project if tax is the issue?

Tony,

With respect, no business makes huge business decisions based on what the polls indicate 1 year from an election. Would you?

 

[Peter 14.7]

Tony,

With respect, no business makes huge business decisions based on what the polls indicate 1 year from an election. Would you?

I think yes.

It was reported independently, the CT alone added $50M to removal of overburden costs at the start of the this project. Wait 12months : save $50M. Not bad?

Peter

 

[Aaron_C]

We have already discussed this hypothetical that even if TA gets into power, the ALP/Greens could block him in the Senate from repealing the legislation until the next turnover of Senators.

 

[Peter 14.7]

We have already discussed this hypothetical that even if TA gets into power, the ALP/Greens could block him in the Senate from repealing the legislation until the next turnover of Senators.

Brings on the Double Dissolution of the Senate. TA would love that and needs it ASAP after he wins. The ALP will fold like pack of cards. Gillard will retire. A new leader will emerge and say "whilst we disagree" we respect the mandate of the people. Labor will not want another election, nor the Greens, who will jump up and down publicly but secretly say "praise the earth mother god".

 

[Aaron_C]

Brings on the Double Dissolution of the Senate. TA would love that and needs it ASAP after he wins. The ALP will fold like pack of cards. Gillard will retire. A new leader will emerge and say "whilst we disagree" we respect the mandate of the people.

Sorry Peter but I dispute that will happen, ever. It didn't happen when Howard won his mandate for the GST - and I don't believe it will happen this time if TA wins, even with a landslide.

 

[dan c]

I wonder if Terry Ryder is reviewing his Hot Spots after this news?

Doesn't seem to be.

http://www.propertyobserver.com.au/...erty-investors-much-terry-ryder/2012082256193