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Drastic Drop in Mining Deals, RSPT Effect?

Is the proposed RSPT of the Australian government to blame for the drastic reduction in mining deals this quarter? It would seem so. A total of 47 deals have been announced in the quarter ending June 2010 which are valued at $914 million.

Compare that to the 89 deals valued at $9.11 billion in the quarter ending June 2009 and you will get the idea of how low that figure is. In fact the data compiled by Bloomberg suggests that this is the lowest number of mining deals on record since the first quarter of 2006 and the smallest value since the fourth quarter of 2005.

The pullback in mining investments has been predicted by most economists given the uncertainty surrounding the RSPT at the moment. Prime Minister Kevin Rudd wants to implement the tax from 2012.

This impending situation has also resulted in a plunge in mining takeovers in Australia with Peabody Energy Corp cutting its takeover offer by 6.3% of Macarthur Coal Ltd. If it does go into effect in its present form, it will be the highest tax rate for mining companies in the world.

Joel Scanlon

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Joel Scanlon

Joel, originally from the UK, emigrated to Australia in 1995 and spent 5 years working in the mining industry as an exploration Geo-technician where he developed skills in GIS Mapping and CAD. Joel also spent a year working underground in a gold/copper mine. Upon moving to the North Coast of NSW, Australia Joel worked as a graphic designer for a leading consultancy firm before starting a successful business providing graphic and web design services to local businesses on the eastern seaboard of Australia. Joel is skilled in project management, content production, design, animation, database and networking, software, and editing. Joel has been with AZoNetwork since its inception in 2000.

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