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It’s time to load up on CARBS, according to a report published in November by Citigroup. Not carbohydrates, but major commodity producing countries, Canada, Australia, Russia, Brazil and South Africa.
According to a report from PricewaterhouseCoopers - Aussie Mine – Onwards and Upwards - Australia’s top mid-tier miners saw net profits grow from A$38 million in 2010 to A$2.4 billion this year. Last month, Australia’s Lower House of Parliament passed legislation for a 30 percent tax on coal and iron ore profits. It is likely that the Minerals Resource Rent Tax Bill will be passed and become law early next year. It has been reported that BHP Billiton, Rio Tinto and other coal and iron ore producers face paying around A$11 billion in extra charges in the first three years of the tax.
In other legislative news, Australia’s Senate has approved a long-debated law on pollution, The Clean Energy Act, which will force Australia’s 500 worst-polluters to pay a tax on their carbon emissions from 1 July 2012. The government has initially set the price per ton of carbon at A$23, significantly higher than other similar schemes such as in the EU. It is expected that Australia’s miners, steel makers, energy firms and airlines will be amongst those hardest hit by the new tax.
Rio Tinto’s joint venture with Chinese state owned resources company Chinalco has been green-lit to begin exploration for resources. It is understood that the new entity, Chinalco Rio Tinto Exploration (CRTX), will first focus on copper before moving into other resources.
It was reported in November that China has been in talks with Rio Tinto, Vale and BHP Billiton to agree a new iron ore pricing mechanism after a significant drop in bash market prices. Last month iron ore prices for immediate delivery plummeted 32 percent as a result of slowing industrial steel demand and China’s credit tightening.
Indian ore exports could be brought to a halt after a commission set up by the Indian government last year recommended a complete ban on the trade until it initiates "a proper mechanism" to stop unlicensed ore mining and exports. Such a ban could wipe out 100 million tons of ore exported annually to China, according to industry experts. Last month it was also reported that a consortium of seven Indian companies, led by the state-owned Steel Authority of India, has succeeded in a deal worth US$10.3 billion to mine iron ore deposits in three sites in Afghanistan.
In an effort to boost prices, in October, 15 tin producers in Indonesia agreed to extend a self-imposed ban on exports after the metal lost 17 percent the previous month in the wake of the European debt crisis. Last month 30 Indonesian smelters, representing about 40 percent of global exports, agreed to extend the halt on spot shipments in order to push the global price to US$25,000 per metric ton.
Download Commodities Brief - December 2011 (PDF 125KB).