May 21, 2010 - Mineral sands producer Iluka CEO David Robb on 20th May told shareholders that the company would be reviewing its investments in Australia, because of the proposed 40% tax on resources profits.
"Our corporate plan will have to consider returns we can make in Australia under this proposed new tax regime versus elsewhere. We will need to review how much of our exploration expenditure is spent in Australia, versus in other countries," Robb said, joining a chorus of miners opposing plans to introduce the tax in 2012.
He noted that it was unlikely that the final shape of any super profits tax would be known until well into next year, making the assessment process difficult.
"A lack of consultation beforehand and an absence of solid detail about how the tax is to work, mean that representation and negotiations on the detailed design of the tax will continue well beyond this year's election and into 2011," Robb said.
The world's biggest producer of zircon has invested more than $650-million over the past three years to develop its Murray basin and Jacinth-Ambrosia projects, in New South Wales and South Australia respectively.
"But future projects will still have to be assessed, including some we had planned to commit to this year," Robb said.
"While the company, in principle, supports the introduction of a well-designed and structured resources tax, as a replacement for the multiple state-based royalties, this tax is nothing of the sort," said outgoing chairperson Bob Every.
Bob Every noted that the company had asked its shareholders to forego dividends over the past three years in order to fund investments in its projects. "Just at the stage where shareholders expect a return to profitability and a reward for their patience and support, the federal government has announced a super profits tax on future earnings, effectively moving the goal post without an recognition of the history of profitability of this company, and I suggest, others in the resources sector."
Bob Every added that more broadly, Iluka was concerned that the tax, if implemented, would make Australia less competitive, which would ultimately affect the contribution of the resources sector to the national economy.
"The proposed tax is ill-conceived, ill-considered and inappropriate at this time," Robb said.