BHP Billiton Ltd., the world’s biggest mining company, said Australia’s mining industry needs a new plan as the sector battles costs that are rising faster than its global competitors.
“When we talk about capturing the next generation of opportunities in the resources industry, we need a new plan - a plan with national productivity at its core,” Jac Nasser, chairman of the Melbourne-based company, said today in notes for a speech to the Australian British Chamber of Commerce. “The industry has experienced unprecedented growth. At the same time Australia’s costs rose more quickly than our global competitors.”
Global mining companies have slowed expansions and delayed projects on expectations that commodities prices have passed their highs, after economic growth began slowing in China. Producers in Australia including BHP feel the pain more acutely as they sell commodities in dollars and pay costs in the local currency that hit a 28-year high this month on a trade-weighted index. The so-called Aussie may not drop in tandem with metal prices, robbing miners of a traditional cost remedy.
The industry has “a stronger Australian dollar; more onerous tax and regulatory requirements; and industry productivity fell,” said Nasser.
BHP fell 0.5 percent to A$33.51 at 12:38 p.m. in Sydney, taking its decline for the year to 9.7 percent. Rio Tinto Group, the world’s second-biggest mining company, slipped 0.1 percent to A$58.215.
BHP paid $9 billion in taxes and royalties in Australia last year, out of a global total of $11 billion, Nasser said. The company had 52 percent of its long-term assets located in Australia as of the year ended June 30, 2012, according to data compiled by Bloomberg.
“This is an effective tax rate in Australia of 45 percent,” he said.
Australia introduced a 30 percent levy on iron ore and coal profits from June 30. The tax raised A$126 million ($132 million) in its first six months, trailing government targets, after commodity prices fell.