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SPOTLIGHT ON VANADIUM 34 BUSINESS DIARY 35 Average Net Distribution PEOPLE AND PROJECTS 36 April 2012 - March 2013 | 5112 copies OUT AND ABOUT 38 SETTING THE STANDARD WA +61 8 9437 1637 QLD +61 7 4848 6588 NT +61 8 8932 4044 Mineral Exploration Drilling & Sampling Production Bores & Dewatering Bores Nearshore & Onshore Geotechnical Investigations Water Wells & Monitor Bores Licensed Drillers Classes 1, 2 & 3 Request a quote & view our Plant & Equipment at our website www.jsdrilling.com.au 4 INDUSTRY INSIGHT Political Grylling Brendan Grylls. BY JACK MCGINN such competitive advantage would be lost with an increase David Flanagan told The Australian’s Andrew Burrell in to the lease rental fee, which the CME has labeled a $7.2 October he had little sympathy for Rio or BHP because of The debate around Western Australian iron ore royalties billion tax. their alleged tax avoidance methods and interactions with has raged from the moment Brendon Grylls reassumed smaller miners on infrastructure. leadership of the WA Nationals from Terry Redman in “The new tax will hurt, not help Western Australian August last year. regional communities,” he said in a media release. While the industry has been overwhelmingly dismissive of the plan to increase the fee, early polling suggests the “Western Australia would officially become one of the least Conversation around Mr Grylls’ proposed increase to a public has taken a more sympathetic view to any plan attractive destinations for investment in the world. It would lease rental fee paid per tonne of iron ore mined in WA 20- around it. fold from 25c per tonne to $5 per tonne sparked passionate undo in one fell swoop the efforts of successive Western campaigns on both sides of the fence and appears likely to Australian governments of both political persuasions to A survey of more than 1700 people conducted by come to a head on March 11, when the state hits the polling develop the great iron ore province of the Pilbara.” ReachTEL late last year on behalf of The West Australian booths to vote on the makeup of its next government. recorded support for the plan, with 45.4 per cent in favour, CME WA argues that adding to the already significant taxes 31.5 per cent opposed and 23.1 per cent undecided. Needless to say the WA Nationals won’t ‘win’ the election imposed on BHP and Rio would make investment in WA outright and wouldn’t harbour any ambition to do so. The less lucrative, and make the state’s iron ore royalties seven Whether these early figures translate to votes on March 11 fate of their ambitious lease rental fee increase rests in times higher than those in Brazil. remains to be seen. the performance of the major parties on March 11, and the The sentiments of CME WA are echoed by Minerals parliamentary balance of power. Professional opinions Council of Australia Chief Executive Brendan Pearson. Analysis commissioned by the Minerals Council of Such was the case in 2008 when a hung parliament “The Grylls tax would represent a gold-plated gift to Australia and conducted by Deloitte Access Economics resulted in a WA Nationals partnership with the Liberals Australia’s iron ore competitors, most notably Brazil,” he was critical of the proposal to up the lease rental fee to $5, and the negotiation of WA’s Royalties for Regions program, said. saying the increase would not have the intended effect a WA Nationals initiative delivering significantly increased long term and could actually take the nation’s iron ore funding for rural areas of the state. “With iron ore accounting for 16 per cent of Australia’s industry backwards. export income, this tax would represent a massive While both major parties have talked it down so far, should self-inflicted wound on both the national and Western Deloitte argues that while increasing the fee would increase the balance of power again fall to the hands of the WA Australian economies.” the revenue it generates in the short term, the long game is Nationals following the state election, the iron ore royalties less lucrative for the WA economy. platform would surely make part of any negotiation. In keeping with these themes, rhetoric has been overwhelmingly negative from the majority of industry Deloitte’s report highlights the impact of GST distribution A change to the lease rental fee wouldn’t impact all WA affiliated groups and figures, though former BC Iron boss on the profitability of the fee to the state’s economy; a iron ore operators as the fee is only applied after 15 years of operation at a site. As it stands, the proposal would affect BHP Billiton, Rio Tinto and Cliffs Natural Resources with more to follow as tenures in the region grow longer. A matter of perspective Industry bodies have been quick to vocalise their disapproval for an iron ore lease rental fee increase, with the Chamber of Minerals and Energy WA spearheading a campaign against it for fears of its impact on the jurisdiction’s investment attractiveness and jobs. In a survey conducted last year by Canadian think tank The Fraser Institute, WA claimed the title of the world’s number one mining investment jurisdiction, beating out Canada’s Saskatchewan and Nevada in the US. Reg Howard-Smith. David Flanagan. According to CME WA Chief Executive Reg Howard-Smith, 5 royalty raise would initially generate revenues of around $2.3 billion a year, but WA would be expected to see less than $300 million of that figure. Long term impact on the nation’s iron ore sector were also raised.