Vale Australia is the latest coalminer to shed workers as the industry tallied up the cost of Tuesday surprise royalties rise in Queensland state budget.
Merrill Lynch estimated the royalties would cost the big coalminers USD 208 million in 2012-13 spread across BHP Billiton, Rio Tinto, Anglo American, Xstrata and Yancoal Australia. As a proportion of forecast net profit this represented less than 1% for most companies except Yancoal which would suffer a 9% drop.
Mr Peter O'Connor Merrill Lynch analyst said the royalties rise would really hit the met coal, semi soft and PCI miners such as BHP, Xstrata, Anglo and Peabody. Yancoal whose shares closed up 3.6% at USD 1.165 recently would be less affected.
Brazilian company Vale global coal headquarters is in Brisbane and it is understood the company has laid off 20 employees from its 1300 strong workforce well below the 900 workers sacked by the BHP Billiton Mitsubushi Alliance and Xstrata Coal announced on Monday.
Vale, the world largest iron ore producer has suffered as prices have hit three year lows. Chief executive Mr Murilo Ferreira has announced asset sales worth USD 1.2 billion including in coal, manganese and logistics and recently flagged possible delays to other investments.
In Queensland, Vale operates the Carborough Downs Mine near Moranbah in the Northern Bowen Basin and is a part owner of the Isaac Plains mine nearby. A Vale spokesperson would not comment yesterday and it is not clear how sensitive these assets were to the royalties increase.
Wilson HTM analyst Mr Andrew Pedler said the royalty increases kicking in at above USD 100 a tonne had been carefully structured to leave thermal coal untouched and to ensure the new rates did not jeopardise planned new mega mines in the Galilee and Surat basins such as GVK/Hancock Alpha mine and Xstrata Wandoan.
But he said the hit to sentiment would have a greater impact than the hit to the bottom line, given former premier Anna Bligh had increased coal royalties in 2008 with minimal consultation.
He added that potential investors may choose to take their money off the table. It would give interested parties pause for thought, even if they're not hit by the tax hike.
Source - Watoday
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