Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Politics / News/  Martin Ferguson | Uranium sale to India after safeguard talks
BackBack

Martin Ferguson | Uranium sale to India after safeguard talks

Martin Ferguson | Uranium sale to India after safeguard talks

Meeting demands: Ferguson says Australian tax systems are not influencing the level of economic growth in China or India. Photo: Jin Lee/Bloomberg.Premium

Meeting demands: Ferguson says Australian tax systems are not influencing the level of economic growth in China or India. Photo: Jin Lee/Bloomberg.

Perth: Australian resources and energy minister Martin Ferguson has supported uranium exports to India and highlighted the importance of Asia, both as a source of investment in Australia and as a buyer of Australian minerals. Ferguson, also the tourism minister, has faced criticism for a carbon tax being imposed on companies responsible for emissions as well as a minerals resource rent tax proposed on profits generated from exploitation of non-renewable resources in Australia. Ferguson spoke about these and other issues in an interview with South Asian journalists on a visit to Australia. Edited excerpts:

When could Australia start selling uranium to India?

Meeting demands: Ferguson says Australian tax systems are not influencing the level of economic growth in China or India. Photo: Jin Lee/Bloomberg.

How much uranium do you think Australia could supply to India?

Our industry will expand its capacity. The amount of uranium to be sold to India, Japan, France, the UK, whatever, will be a commercial issue between Australian mining companies and those who want to buy Australian uranium. That will vary year-to-year or decade-to-decade depending on demand. There is growing demand for uranium from India because they are going to increase their nuclear capacity, just like there is a growing demand for Australian uranium potentially in China. The United Arab Emirates (UAE) is another one. We’ve got bilateral discussions with the UAE about selling Australian uranium. They are building three nuclear...reactors.

Watch Video

Martin Ferguson says that while Australia’s new tax on mineral resources won’t increase their prices, his government cannot push coal miners to sell at below-market rates.

Loading video

What is your rationale behind taxing the mineral sector when it is shooting up costs and prices?

Firstly, the Minerals Resource Rent Tax (MRRT) only applies to coal and iron ore. It does not apply to uranium. And the other change in the taxation regime was the petrol and resources rent tax. Historically an offshore industry, the industry is now developing onshore. So we applied the same tax system on the shore petroleum products because it is a level playing field. We’ve had record commodity prices, far higher than anyone expected. Royalties are paid irrespective of good or bad times in terms of commodity prices.

MRRT aimed at coal and iron ore is a profits-based tax during periods of record commodity prices. Hence, we apply this new tax. Australian community owns resources. We only get one chance to develop resources. Therefore, during times of record profits, the Australian community ought to get a share of those profits. The truth is, a lot of countries are now looking at MRRT as a potential model to apply profits-based taxes to develop their resources sector. I know a number of countries are talking to me about it.

Do you think you might change or tweak these taxes?

We’ve entered into an agreement with the mining industry. This has been legislated. It will come into force from the 1st of July this year. There is no proposal to extend it to other commodities. We’ve had that debate. 90% of profits-based tax is going to come from two commodities —coal and iron ore.

Some of these markets are slowing, steel and iron ore for instance, and the industry is not happy about the taxes. What do you have to say to them?

Demand for Australian commodities or any commodities goes up and down from time-to-time. MRRT is not contributing to changes in market conditions based on supply and demand. Australian tax systems are not influencing the level of growth in China or India. It’s their own economic activity.

But even though they are slowing, you’ve still got growth of 8% in China, which is not bad. Indian growth is also pretty good. Demand for coal in India from Australia is pretty good. There’s a demand for iron ore from Australia, too. So we will sell commodities according to demand. MRRT has no impact at all on those international prices.

There are reports about Adani Group and GVK group facing environment clearance issues in Australia. What are your comments?

In Australia, we are now rationalizing the face of state and federal environment processes to try and get a one-stop shop to make it easier from a regulatory point of view to get environment approval. That’s a decision of the meeting with the prime minister with state territory premiers and chief ministers about a fortnight ago. I am working with GVK in terms of their environmentals to try and make sure we get them approved as quickly as possible.

One of the issues in that corridor is actually not environmentals, it is actually getting the potential coal companies to cooperate on railway infrastructure. There are three potential coal-producing firms in that corridor. We don’t need three separate railway corridors. We are trying to encourage cooperation, which is commercially smarter for each of those investors focused on the development of their port activities. And I have told those Indian companies it will be smart to cooperate.

India needs a lot of coal. Are you in talks with the government or has the government approached you?

I speak to Indian ministers on a regular basis.

The Indian industry finds it hard to pay the prices that Australian coal suppliers demand. Is there anything that could help them in terms of deals and discounts?

The prices are based on international supply and demand. We can’t get involved on those matters. Australian coal is on offer. You pay the appropriate market price. There are no subsidies.

Has the Indian government asked you for any kind of a deal?

No. Even if they asked, I would not do anything because I do not get involved on commercial matters. It is inappropriate. We operate on a market-based system and there is no role for government for commercial negotiations.

With the new taxes you are imposing, prices are set to get higher…

No. It is a profits-based tax. Prices won’t get higher because Australian coal is sold on the basis of international price. A profits-based tax is aimed at the government getting a greater share of profits of companies that invest in Australia. It will not impact prices. International price is a question of international operations of supply and demand.

It still hurts the profit margins and producers tend to pass it on.

If they try and pass it on, there will be a supplier out of Indonesia, for example, who will supply it at a cheaper price. Or even potentially out of the US.

What will be the impact of the carbon tax from 1 July? Will minerals be costlier around the world?

The carbon tax will have no impact whatsoever on the investment flows into the resources and minerals sector in Australia. The carbon tax was announced last year, but investments have been coming in at a steady pace. There is absolutely no reason why the cost of coal, LNG (liquefied natural gas), iron ore or gas would go up after the carbon tax comes into force.

Ruchira Singh was in Perth as a guest of the Australian government.

ruchira.s@livemint.com

Also Read |New South Wales to open Delhi office

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Politics News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 11 May 2012, 12:22 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App