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Wildebeest is a PhD MBA who invests primarily in resource stocks such as base metals, iron ore and coal.
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  • Port Data from Los Angeles, Long Beach and New York/New Jersey
    Outbound and inbound container movements from the ports of Los Angeles, Long Beach and New York/New Jersey are shown next two charts. Note the clear seasonal pattern in the inbound container data. Total TEUs shipped from the 3 ports in April 2010 was 831963. This compares with 732050 in 2009, 919590 in 2008, and 916091 in 2007.

    Disclosure: no positions
    May 28 3:42 PM | Link | Comment!
  • Charting????
    Is it valid to rule a line like this on charts?

    Why is it valid to rule a straight line on a logarithmic scaled chart?

    These two charts are IDENTICAL.

    Disclosure: not relevant
    Tags: charting
    May 21 10:34 AM | Link | 4 Comments
  • Australia to increase taxes on miners?
    The Australian Government seems likely to impose a resource tax on miners. The sort of numbers being mentioned in the article below will be material to the accounts of majors like BHP and Rio Tinto. While a proposed new tax would replace some existing taxes this would not be being proposed unless the overall tax take was going to rise. From
    Miners should pay the rent

    Karen Maley

    It now seems increasingly likely that Kevin Rudd and Wayne Swan will soon be peddling a new resource rent tax on mining companies, arguing that it will ensure that the entire country gets to share in the benefits of surging commodity prices.

    The long-awaited Henry tax review – which will finally be released on Sunday – is expected to push for a new 40 per cent national resource rent tax that would be levied on the super-profits earned by mining companies. This new tax would only kick in once the company had earned enough to cover all its exploration and development costs on a new project, and it would only apply to the project’s "super-profits" – that is, the profits that the miner earns above a "hurdle" rate of return on the initial investment.

    There are some very strong reasons to support Henry’s proposed new resource rent tax, which is meant to replace the existing system of royalties that the mining companies currently pay to the various state governments.

    In the first place the new tax is better designed, because it applies to the actual profits earned by the miners. By contrast, most of the state government royalties are based on the number of tonnes of coal or iron ore that the miner digs up. This has the effect of unfairly penalising the lower-quality mines, which face much higher production costs, and discouraging miners from developing marginal projects.

    There are also major advantages in imposing resource taxes at a national, rather than a state, level. At present, state governments are reluctant to increase the royalty levels for fear that powerful mining companies will give priority to developing mines in other states.

    The other big benefit is that Henry’s tax is aimed at capturing the "super profits" that the miners are currently earning as a result of surging commodity prices – It’s estimated that miners such as BHP Billiton and Rio Tinto would have delivered an extra $14 billion in revenue over the past three years had the resources rent tax been in place. But mining companies can console themselves with the thought that they’ll face a much lower tax bill when commodity prices slump, and their mining projects are far less profitable.

    The trouble is that Henry’s great plan requires the consent of the resource-rich states of Queensland and Western Australia – which account for around three-quarters of the country’s mining production.

    And these states – particularly Western Australia – are vehemently opposed to this new resources rent tax. They’re already faced with a shrinking tax base and they’re deeply reluctant to hand over yet another source of revenue to Canberra. What’s more, they’re suspicious that a lot of this revenue will be funnelled into the so-called “rust bucket” states of New South Wales and Victoria.

    As a result, there’s now increasing speculation that Rudd will choose to sidestep a head-on confrontation with the states, and instead will hit mining companies with a smaller resource rent tax on top of existing state royalties.

    Of course, if Rudd takes this step, many of Henry’s arguments in favour of the resources rent tax will be thrown out the window. And we can expect howls of outrage from the mining companies that they now face an extra national levy on top of the already messy system of state royalties.

    Still, Rudd will be strongly tempted to push ahead with the new tax. There is a very persuasive view in Canberra that most Australians are missing out on a big chunk of the benefits from the massive surge in commodity prices that we’re currently witnessing. Instead, the benefits from the country’s non-renewable resources are being showered on the mining company’s shareholders – many of whom are offshore – and on the senior executives of the mining companies.

    There’s huge political appeal in using the proceeds of a new resource rent tax to pay for a small cut in the corporate tax rate – which would benefit all Australian companies – or to set up a sovereign wealth fund that would continue to provide the country with an income stream once the current boom subsided.

    Norway, for instance, set up a sovereign wealth fund in 1990 to ensure that some of the massive profits generated by the Norwegian petroleum sector could be used to pay for the huge increase in spending on public sector pensions that the country faced in coming years The Norwegian government demonstrated the advantages of having an extra savings pool when it tapped the fund, which now has about $US470 billion in assets, to help pay for the aggressive stimulus package it launched following the financial crisis.

    The mining industry can be counted on to oppose any new resource rental tax from Rudd. It will likely warn that we’ll see an outflow of foreign investment as companies seek to develop mining projects in countries with a lower tax regime.

    But such claims need to be taken with a large grain of salt. As both BHP Billiton and Rio Tinto have discovered recently, there are huge advantages in doing business in a politically stable country with a well-educated workforce and a strong legal system.

    Only last week, BHP revealed that it is cooperating with the US Securities and Exchange Commission regarding possible breaches of anti-graft laws. Although the giant mining group has been tight-lipped about where these alleged incidents took place, there’s widespread speculation that they are connected to two exploration projects – one involving a bauxite prospect in Cambodia, and a nickel and cobalt prospect in the Philippines.

    The BHP revelation comes shortly after China jailed four Rio Tinto executives, including Stern Hu, for bribery and infringing commercial secrets.

    And while the mining industry will protest that Rudd’s new tax could jeopardise more than $100 billion in future mining projects currently under consideration in Australia, the recent experience of BHP and Rio only reinforces the huge difficulties and heavy costs involved doing business in emerging countries with different business practices.

    Disclosure: long BHP
    Apr 29 9:24 PM | Link | 2 Comments
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  • Codelco output up 5.7%: pundits tell us that there are supply shortfalls and lower grades blah blah blah.
    May 27, 2011
  • Labor has claimed victory in the Australian election. This means the Labor-Green alliance will govern. A disaster for miners. Sell.
    Sep 7, 2010
  • Reports from Australia that the BHP Rio Tinto iron ore joint venture will not get regulatory approval.
    Aug 19, 2010
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