Mining takeovers in Australia, the biggest shipper of iron ore and coal, are set to hit a five year low this quarter after the government proposed the introduction of a mining super profit tax.
According to data compiled by Bloomberg, there have been 47 announced deals valued at AUD 914 million this quarter, compared with 89 deals worth AUD 9.11 billion in the three months ended June 30 a year ago. That’s on track for the lowest number of deals since the first quarter of 2006 and the smallest value since the fourth quarter 2005.
Mr Tim Goldsmith, global mining leader for PricewaterhouseCoopers LLP based in Melbourne said that “We are certainly seeing a pullback in mining transactions. What the announcement of the super tax has done is provide uncertainty and while companies are uncertain they tend not to transact.”
A slowdown in takeovers was predicted last month by Citigroup Inc and Xstrata Plc which joined with BHP Billiton Ltd and Rio Tinto Group to campaign against the 40% tax on mine profits. The planned levy has stalled mine investment and prompted a plunge in opinion poll support for Mr Kevin Rudd prime minister who must hold an election in 10 months.
Mr Rudd wants to introduce the tax from 2012, raising an estimated AUD 12 billion in the first two years. It will give the nation the highest tax rate in the world for mining companies.
(Sourced from Bloomberg)
