Australia’s major coal miners have found their supposed fears about the proposed resources profit tax no barrier to trying to increase their hold on the Queensland coal transport system.
And three major banks, the ANZ, and foreign giants, BNP Paribas and Citibank, have shown no fears about the tax in funding the proposed offer.
In a statement yesterday, 13 of the major groups, led by BHP Billiton and Xstrata, two of the loudest opponents of the proposed tax, confirmed their interest in buying the Queensland Rail coal network for a total of $4.85 billion.
The Queensland government is seeking to sell the Queensland Rail coal track network via a public float.
The coal industry wants control in a way similar to that BHP and Rio use in their iron ore businesses in Western Australia. BHP and Rio are refusing to let third parties like Fortescue Metals, use their tracks for a fee, despite the iron ore rail system being ‘declared’ by competition regulators, which would allow third party access.
Asciano, the ports and rail group, are also interested in becoming involved in the QR coal network sale.
Yesterday’s announcement quotes the chairman of the industry group, former NSW Liberal Premier Nick Greiner, who obviously can’t see any threats to the bid from the tax.
Mr Greiner says in the statement, "The fully funded offer represents a substantial premium to what is likely to be achieved under the Queensland Government’s proposed Initial Public Offering (IPO), or realised in recent comparable transactions.
“Importantly, our offer is able to be settled with the Government prior to the IPO and will not be dependent on volatile equity markets, removing major risk for the State while also providing early settlement,” Mr Greiner said.
“We have considered the alternative model under the IPO and associated regulation and legislation and strongly believe it does not represent an optimal or even reasonable basis for assuring the future of the State’s major export industry.
“The QCIRG offer has four goals: to encourage fair and open access, optimise network performance, enable early system expansions, and encourage rail haulage competition, all with flow-on benefits through enhanced investment, employment and royalties.
“The members of QCIRG are committed to expanding the network to support future growth and in addition to the offer, QCIRG has established a facility to fund the current QR capital plan and also further rail capacity growth,” he said.
ANZ, BNP Paribas, one of Europe’s biggest banks is there as well and Citibank are underwriting the proposed purchase to the tune of $1.35 billion and they will finance a maintenance and capex facility totalling "in excess of $2.05 billion".
Rio Tinto is a member of the group, despite its chairman and CEO both claiming the proposed tax raised questions about sovereign risk in Australia.
Here are the companies involved, from today’s announcement: Anglo American Metallurgical Coal, BHP Billiton, Ensham Resources, Felix Resources, Jellinbah Resources, Macarthur Coal, Peabody Energy, Rio Tinto Coal, Vale Australia, Wesfarmers Resources and Xstrata Coal. The statement says all have "signed equity Subscription Agreements".
"In addition, Aquila Resources and New Hope Coal Australia are supporting parties and have the opportunity to provide equity at a later stage."
In Melbourne the Rio AGM heard more of the same from the chairman, Jan du Plessis and Tom Albanese, the CEO.
Mr du Plessis told shareholders the retrospective application of the tax was a "dangerous prospect".
"And has the potential to destroy Australia’s hitherto excellent reputation in the global community," he said. "I don’t say these words lightly and I’m very keen to work with government to get to the right policy outcomes for the industry and for the nation.
"However, a retrospective taxation raises sovereign risk and will, as sure as night follows day, increase the cost of investing in this country for the next generation."
Mr Albanese said Rio Tinto had been paying a "fair share" of tax and was only looking for "fairness on consultation".
"This means a thorough and proper dialogue on the key issues of retrospectivity, immediate capital write-down, the 40 per cent tax rate and the six per cent rate of return," he told the AGM.
He echoed the warning of the company chairman, saying Australia’s reputation had already been damaged by the tax proposal.
"But it’s not too late to make changes that protect Australia’s vital mining industry, its attractiveness for investment and the hundreds of thousands of jobs that depend on it," Mr Albanese said.
Rio shares jumped 2.6%, or $2.25, yesterday to $63.95.
