The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Friday, May 28, 2010

$27bn in iron ore exports at risk...

The Australian covers the independent views of market analysts:

"Citi analyst Clarke Wilkins said long-term plans of Rio, BHP and Fortescue to add more than 200 million tonnes of production in their Pilbara iron ore operations in Western Australia would be delayed by the tax, which was not expected to be legislated until 2012.

This would mean a combined 148 million tonnes -- worth $US22.9bn ($27.6bn) at current spot prices of $US155 a tonne -- would be cut from exports between 2012 and 2014.

Based on Citi forecasts for the period, over which prices are expected to gradually slide to $US90 a tonne, that would represent $US12.4bn of export revenue. "At the very least, the proposed RSPT could result in 12-month delays to the projects, as company boards would be reluctant to sign off on a multi-billion-dollar project until they have certainty around the fiscal regime in which it will operate," Mr Wilkins said.

"At worst, some prospective projects may remain just that."

Rio iron ore boss Sam Walsh has said $US11bn of his expansion plans were on hold and delays were already occurring.

Mr Wilkins said the tax would slash by 35 per cent the net present value of Rio's planned Pilbara iron ore expansion, from 220 million tonnes a year to 330 million tonnes, if it was implemented.

It would still be a profitable project, but it would mean the Pilbara expansion would have a lower value to Rio than a proposed 170 million-tonne-a-year Simandou project in Guinea, despite having a lower development cost and coming to market much more quickly.

That could mean the Pilbara expansion slipped down the list of Rio's priorities."