MINING INDUSTRY CALLS FOR GILLARD TO DROP MINING TAX ALTOGETHER

Sydney – Friday 30 July 2010. Despite the Government’s attempts to modify the new mining tax as a measure to regain support from the sector, mining executives across the board call for Gillard to drop the tax altogether, a new

report by operational management consultancy, Newport Consulting finds.

The report, “Mining Business Outlook 2010-11”, releasedyesterday canvasses the views of mining executives from both small and large resources companies. The report draws on a series of in-depth, face-to-face interviews with 23 executives on their thoughts on the economy, on capital investment, on government initiatives, their focus areas for 2010-11 and the issues keeping them awake.

The report finds that 77% of mining executives interviewed call for Julia Gillard and her Government to drop the mining tax altogether. According to one mining executive, “We don't want a tax of this nature, it would be better to increase royalty payments. This tax will not benefit anyone. The Government needs to drop the tax altogether.”

The report also finds that there is a growing level of optimism on the state of the economy with a large majority of mining executives (57%) saying that they are ‘somewhat optimistic’ of the state of the economy over the next 12 months. 37% said that they are ‘very optimistic’. However, our report suggests that growing levels of optimism aren’t translating to an increase in spending with 57% saying that spending will remain limited this financial year.

Mining executives confessed that if the mining tax is dropped altogether, they will then be able to match their otherwise optimistic view of the economy with appropriate levels of investment spending. One mining executive said, “We look forward to a very positive year but with a new mining tax looming we’ll severely limit our spending. This could change if the new mining tax is dropped.”

Mark Bagster, Associate Director and Mining Specialist at Newport says, “Our report suggests that despite modifications to the new mining tax, there is a strong call to action for the Government to drop the tax altogether. The industry is concerned about whether future legislation will represent the latest modifications. As some mining executives point out, the legislation will not be enacted until after the Federal election and given the way the tax has

been handled to-date they are worried and are left with a sense of distrust as to what the final result might be.”

Mark continues, “We are also hearing that mining executives are concerned about the Labor Party’s recent preference deals with the Greens and the impact of this on the tax. The mining tax is clearly still on the minds of those in the industry and they have a very strong message for Canberra – drop the tax.”

Mining executives are also concerned about ‘the ability to attract overseas investment’ (18%) and the impact of this on their businesses. Some executives said that their expansion and operational plans rely heavily on investment dollars and with the mining tax still looming, they are now unsure as to whether they will be able to attract the adequate levels of investment required to fund those plans. This in turn negatively impacts growth and expansion of the sector.

Another issue keeping mining executives awake is ‘safety’. 32% of interviewed executives commented that maintaining a safe environment with nil accidents is a constant focus for them. Mark says, “The mining sector has invested enormous amounts of time and money in improving safety operations over many years and our interview responses show it remains unfinished business. Australia’s desirable record of a ‘safe mining performance’ requires continued vigilance and an active management approach.”

Other key findings of the report include:

Cost control and management is a clear focus area for mining executives in 2010-11 with more than 50% of interviewed mining executives saying that they are focusing on reducing or closely managing their

organisation’s cost base.

Improving operational efficiency (44%) through increasing production and utilisation of resources, and reducing machinery downtime and waste at mine sites is another key priority of mining executives in 2010-11.

The key drivers for those mining executives that have a ‘very optimistic’ or ‘somewhat optimistic’ view on the state of the economy are increased coal prices (29%), increased demand for commodities (19%) and

increased productivity (10%). ENDS ~

For media inquiries or for more information on Newport Consulting’s mining report please contact Gemma Manning from Manning & Co on 0404 539 400 or at gemma@manningandco.com.au

About Newport Consulting (www.newportconsulting.com.au) is an operational management consulting company that helps organisations improve their business performance through achieving operational excellence.

Newport was founded in early 2006 by David Hand and Karin Haberl. David is one of Australia’s leading operational improvement experts. Newport has worked in a number of key industry sectors including the resources sector and has worked with some of Australia and New Zealand’s leading corporations.