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Small miners want detail on tax reform

A small Australian mining company has told SBS that even small miners are facing major uncertainty over the proposed Resource Super Profit tax, despite government attempts to placate junior operators.

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Alkane Resources is a multi-commodity producer, but plans upcoming production of gold and the increasingly valuable rare-earth metal group, which China currently produces up to 97 per cent of.

The government is offering a rebate on exploration costs, and has touted the benefits for junior mining companies.

Alkane Resources Managing Director Ian Chalmers says other smaller miners ‘might be’ tempted by the rebates on offer when it comes to exploration, but it’s far from certain.

‘If I was (only) a junior explorer offered a rebate on the money I’d be drilling holes all over the place, but you only get the rebate if you go into production.’

When it comes to the proposed 57 per cent ‘tax shield’ on exploration costs, Chalmers is incredulous.

‘If the mine falls over, they’re going to reimburse the costs…that to me was amazing. I can’t believe a government anywhere in the world could come up with anything like that.’

Air of uncertainty

‘The cautious response is that until we see the actual detail, I’m still very vague as to how it’s going to work…and I gather it may be twelve months until we see the detail.’

Chalmers says that large and small mining companies do not necessarily speak with one voice, but he agrees large companies could get ‘hammered’ over the tax slug on ‘super profits’.

‘If I take a broader view, it does seem to be a horrible cynical ploy trying to generate votes in the big population centres of Melbourne and Sydney, and the mining industry is well out of sight of Melbourne and Sydney.’

Rare Earth could be hit

Big mining companies have been queuing up to announce projects put on hold in recent weeks, but smaller miners such as Alkane, with planned gold and rare earth metal projects, are also being hit hard with investors concerns.

‘Rightly or wrongly, it’s frightening investors away’, says Chalmers.

‘In eighteen months time when we’re looking to fund the Dubbo rare earth project, and looking for $150m or $250m, if that tax comes into being, it may be very difficult for us to raise that money, unless we end up selling our soul to the Chinese.’

Rare earth metals are used in a range of hi-tech applications, and there is increasing concern at Chinese attempts to limit production and export of the metals from its Inner Mongolia mine.

‘There’s this nagging little doubt of what is this super profit tax going to do to us. Is it going to affect us? The short answer is that we don’t know.’

Chalmers says the government probably expected a warmer welcome from small miners, but he just needs to see the detail.

‘Until we small miners understand the detail we can’t be happy or less happy, or completely negative.’

Abbott blames Gillard for cattle quota cut

The federal opposition says the Labor government is to blame for Indonesia’s plan to cut Australian live cattle imports almost by half.

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The Indonesian agriculture ministry has confirmed plans to cut the cattle import quota from more than 520,000 head to only 280,000 next year.

Australia’s cattle industry was surprised by the size of the cut, but the move was foreshadowed in July when it was revealed Indonesia was more advanced than previously thought in its drive to become self-sufficient in beef production by 2014.

The scaling back of live cattle imports is based on the latest census of domestic cattle available for slaughter in Indonesia. It shows Indonesia has increased its stocks to about 14.4 million – well in excess of the 14.2 million Jakarta believes is needed for Indonesia to become self-sufficient.

But Opposition Leader Tony Abbott says Labor is to blame for the reduction and called it “very, very bad news indeed for the cattle producers of the Northern Territory”.

The Liberal leader, visiting Darwin on Friday, said Jakarta’s decision was linked to Australia’s suspension in June of live animal exports to Indonesia.

The temporary ban came after video evidence on ABC television showing the mistreatment of animals in Indonesian abattoirs.

Exports only resumed after an agreement was reached on new standards for the treatment of animals bound for slaughter.

Mr Abbott told reporters Prime Minister Julia Gillard had bungled Australia’s response by sending “incompetent” Agriculture Minister Joe Ludwig to Indonesia earlier this year. “He plainly made a bad situation worse,” he said.

“If this was a functional government, as opposed to a dysfunctional government, Julia Gillard would have been prepared to send (foreign affairs minister) Kevin Rudd.

“So, the cattle producers of the territory are in this jam, in large measure, because Julia Gillard wasn’t prepared to let Kevin Rudd do his job.”

Nationals leader Warren Truss was even more blunt, saying, “The Indonesian government has retaliated by accelerating moves towards self-sufficiency.

But Australian producers may not be in as big a jam as they think. Joni Liano, executive director of the Indonesian Meat Producers and Feedlot Association, told AAP the number of live cattle that would be needed for slaughter next year was still close to 500,000 head. He said Jakarta’s census figures were optimistic.

“The quota request for cattle imports has been submitted, and in 2012 there should be 480,000 to be imported from Australia.”

The Cattle Council of Australia says the large import quota cut outlined by the Indonesian government on Friday would, if realised, have a significant impact on northern beef producers.

“It’s quite a large reduction and more than we expected,” vice-president Andrew Ogilvie told ABC TV.

Animals Australia, which was instrumental in exposing cruelty at Indonesian slaughterhouses, says Friday’s announcement isn’t a reprieve for livestock.

More and more animals were being sent to other markets such as the Middle East, Egypt and Turkey “where, like Indonesia, animals are permitted to be brutally slaughtered while fully conscious,” executive director Glenys Oogjes said in a statement.

Queensland Premier Anna Bligh says the reduction in Indonesian imports is a devastating blow for producers but she can see one positive aspect.

“It does spur us on to … continue the work we’re doing to look at an abattoir at Cloncurry to give these producers the option of domestic production,” she told reporters in Brisbane.

An abattoir could get top quality Queensland beef from north Queensland to the domestic market in a more commercially viable way and diversify options for producers, she said.