While Julia Gillard might be basking in the light of her new tax deal with Australia's biggest miners, the rest of the sector has been left asking what it all means.
While Julia Gillard might be basking in the light of her new tax deal with Australia's biggest miners, the rest of the sector has been left asking what it all means.
The basic points may have been hammered out, but there remain enough holes and uncertainties about the fine detail and implementation to keep most miners nervous about their future.
At its heart, this deal still equates to a great big extra tax on Australia's mining sector. As WA Chamber of Minerals and Energy boss Reg Howard-Smith said today, Australian miners will still be the highest taxed in the world.
But at least for once Canberra is being honest about the true nature of its tax ambitions.
From the time the resource super profits tax was a glint in the eye of dumped PM Kevin Rudd, it was all about one thing only - Canberra siphoning off the rivers of iron ore and coal revenue that were pouring into the state coffers of WA and Queensland.
That fact is now publicly acknowledged in that the new Mineral Resource Rent Tax will apply only to iron ore and coal, and only to those producers which make more than $50 million in profits each year.
For further proof of that, look no further than the government's estimate that despite such significant changes, it will be foregoing only $1.5 billion in tax from the $12 billion it initially expected to reap by 2014.
A deal of scepticism must be attached to the government's estimates, especially if as seems to be the case, they are based on a sudden upward revision of forecast iron ore and coal prices since the RSPT was announced in early May.
Nonetheless, it does clearly demonstrate that the government was never banking on collecting much in the way of cash from any other segments of the mining sector.
That said, there are clearly "relative" winners and losers - other than Julia Gillard and Tony Abbott.
For the resources sector overall, the deal clearly represents a significant improvement over the RSPT proposed by Kevin Rudd.
The exclusion of all minerals other than iron ore and coal does mean that the vast majority of mining and exploration companies will never pay an extra cent of tax under this plan. Especially as it also excludes those marginal or start-up iron ore and coal miners that make less than $50 million in profit.
In a WA context, probably less than a dozen companies will be liable to pay the tax in the next four or five years.
The rider to that of course is how long the exclusion lasts - it might be stated policy to limit the tax to coal and iron ore now, but it seems there are no concrete guarantees that will remain so into the future.
And given the rapidity of recent changes in government policy, who would be brave enough to bet on that should prices for any other commodity suddenly spike?
That should make a written guarantee against any extension of the scheme a high priority for the policy transition group co-chaired by ex BHP chairman Don Argus.
Queensland's fledgling coal seam gas-to-LNG industry is also an obvious winner, which as expected, will be covered by the Petroleum Resource Rent Tax regime which applies to the offshore oil and gas industry.
Under the new deal, all oil and gas projects will be covered by PRRT, even the currently exempt North West Shelf project, putting them all on an even footing.
Theoretically that should actually benefit the Shelf partners, led by Woodside Petroleum, given that the $14 billion paid in taxes and royalties by the project since its inception is far higher than it would have paid under the PRRT.
However, it is understood that the Shelf's transition will be structured such that its net tax position will not change, though the individual partners will benefit from the 1 per cent reduction in company tax to 29 per cent.
The big miners, though they will have to pay billions more in tax overall, will also be far better off than under the Rudd tax plan.
Aside from the obvious cut in the headline rate from 40 to 30 per cent, and a doubling of the threshold at which the tax kicks in to around 12 per cent, the recognition of their existing capital investment at market value is a significant change.
They will now be able to choose whether they recover that investment via deductions for depreciation over 25 years, or by fully depreciating the book value of their existing assets over just five years - something that may have appeal for mines only newly completed or now under construction.
Similarly, the ability to claim a deduction for all new capital investment in the year it is expended will be of significant benefit.
But there are also clear losers, particularly among WA's emerging iron ore miners who were excluded from the negotiations with government.
Magnetite producers, which like coal seam gas is a fledgling industry in Australia, will be taxed on an even footing as conventional iron ore miners who undertake limited processing of their ore to produce a saleable product.
And junior producers, such as Atlas Iron and BC Iron, rightly fear the potential impact on their ability to attract investment capital given their lesser access to conventional debt funding.
As Atlas boss David Flanagan says, increased tax means less profit to reinvest and makes a business less attractive to outside investors.
That in turn consolidates the dominance of the existing major producers, including Fortescue Metals, by making it harder for others to enter the industry.
The question also remains whether this whole dispute has already done irreparable damage to Australia's ability to attract foreign investment and whether investors spooked by the Rudd plan will return to these shores anytime soon.
Explorers also lose the previously proposed rebate on exploration spending that was the one feature of the RSPT that did attract support from the sector.
The key for the juniors and emerging miners will therefore be to get a seat at Don Argus' table when the finer points are nutted out over the coming months and ensure their voice is heard.
Meanwhile, the non resources sector is looking at increased superannuation costs that will be offset by halving of the previously proposed reduction in company tax.
So while the heat may have gone out of the public debate, there is a long way to go before workable and broadly acceptable legislation can be finalised.
Not to mention the even bigger political hurdles that stand in the way.
