Sarah. I'm not quite clear what point you are trying to make. I think that you are saying that governments always find it hard to impose taxes on the mining industry.

I can tell you from my nearly 50 year involvement in the mining industry that there is one thing that is certain about the industry - it is cyclical. And generally the cyclicality derives from the fact that supply shortages lead to higher prices, which leads to an investment boom, which leads to a dramatic increase in production, most of which is higher cost. Excess production causes lower prices. Over-geared and high cost projects face serious difficulties, the mining sector of the equity market declines, and so it goes. Microeconomics 101 at work. And it is bound to happen again, sooner or later.

For most of my career, we could see that strong demand would be coming from China/India as they develop their economies, but it took a very long time to emerge. But when it did, it was huge, which is one reason that the recent boom was as strong as it was.

As to your points about taxation. Most people don't seem to realise that mining companies pay royalties for the use of a "public asset", an asset that in most cases was never even known about until the mining company invested many millions in risky exploration, resource assessment and development. For iron ore producers, royalties are currently 7.5% of revenue. On top of that the mining companies all pay corporate tax on profits, payroll tax, and their suppliers and employees all pay GST, income tax and all the rest. It is a bit of a stretch to say that the mining companies are undertaxed.

Also, the supposed "subsidy" re no excise on diesel fuel used by miners is poorly understood. The excise was originally imposed to finance roads. Mining companies didn't use the roads, so were given that exemption. As were farmers. Hardly a subsidy.

A further point about the royalties paid by mining companies. In fact, many enterprises use "public assets". Anytime a company secures a license of any kind, it is using a public asset. For example, the banks require a license to operate. That gives them a monopsony power in the market place. Further, the government guarantees portion of their deposits. If we were to apply the same rules as are applied to the mining companies, wouldn't we impose a 7.5% of revenue "royalty" to the banks?

The same principle applies to many other public assets - TV licenses, broadband spectrum, air corridors, highway corridors, and even to land.

Why don't we set up an agency to assess the public assets utilised by all corporations in the country, and apply equal royalties for the use of these public assets. That would create a level playing field. Oh, and it would also reduce the billions made by those clever enough to secure valuable licenses on an underpriced basis.

In fact, I suggest that rather than trying to impose yet higher taxes on the mining companies during their boom times, if we were to impose royalties on all who use public assets we might find that we only need to charge, say, 2% of revenues. That would probably generate much greater revenues than sticking it to the mining companies, and would be much more sustainable.

Exploration in the iron ore mining is very cheap, it consists of analyzing the ore content / ton.
An American found the purest deposit of ore yet found. His name was Tom Price. He done his best to get the govt; of the time to mine it. He died in his office in America soon after going home.

If we were just half smart, we would simply jettison all the current taxes and replace them with a simple stand alone expenditure tax.
Expansion would be carried on at a far more rational sustainable pace, given there'd be no tax advantages in spending money, particularly if the extra production simply floods the market and drives down prices, income streams or revenue.
It'd be a win/win for almost everyone, except entirely unproductive parasitical tax practioners, as they would no longer be needed.
Even so, the much larger revenue stream that would ensue by ending all avoidance, would create massive new surpluses, which could be reinvested as start up or venture capital?
With former tax practises invited to set up as franchised, modest owner operator banks, with an almost endless supply of endlessly growing, low cost venture capital.
And, recapitalized, in direct proportion, to the number of successful new ventures they underwrite and provide, with the business acumen/expertise, that ensures they not only get off the ground, but emerge, earmarked for solid success, from which they would earn monthly commissions, at least until all the start up capital were repaid!?
Think, the richest man in the world, Bill Gates, started off in the family garage, helped by a just few friends!
We should invest in own own people and their better ideas!
Rather than kow tow to debt laden carpet bagging foreign investors, many of who see as as a completely captive market, or price takers, with few other choices?
Who can also be tasked with servicing the often massive and exponentially growing debt burden that transfers to us, with almost every foreign "investment"?
Ever wonder why we pay a 30% premium at the checkout or much more for the same item, than say the standard price in Canada or America, or Europe, etc/etc?
Surely we are closer to Japan or China or Taiwan, than almost any of the aforementioned?
So it can hardly be additional transport costs, making our prices so much higher?
Rhrosty.

Scrap all the taxes, except company and PAYG, and the consessions and subsidies. Then impose a 10% gst on the export price... to be paid by the buyer.

Herbert are you suggesting the the FDI corporates involved in the mining sector are not registered in offshore tax havens and thereby hiding their income/profits to the great benefit of their shareholders.
Den 71

DEN71. Que?? Where did I suggest anything like that?