Aussie tax may push global iron ore, coal prices

With the Australian Parliament passing a legislation to impose 30 per cent tax on iron ore and coal mines, coking coal and iron ore prices may see a rise in the global markets impacting margins of Indian steel and power companies, analysts and traders have said.

"As far as tax on iron ore is concerned, there may be some kind of price rise globally, as miners will pass on the cost to importers. However, rise in coal price may have negative impact on margins of the steel manufacturer in the country, who mostly rely on coal (coking coal) import from Australia," Federation of Indian Mineral Industries (Fimi) Southern Chapter Chairman Basant Poddar told PTI Wednesday.

He said any increase in iron ore prices would benefit only the Goan miners as exports from other places of the country has been substantially reduced in the recent time.

On Monday, the Australian Parliament passed a law imposing a new 30 per cent tax on iron ore and coal mines. As per reports, the law will affect about 30 companies, including global miners like BHP Billiton and Rio Tinto, and is likely to raise USD 11.2 billion in first three years.

Last year, Indonesia, which is rich with coal mines, also passed a legislation, which sought to align coal prices shipped abroad with prevailing international prices.

The Indian Government back is planning to introduce a profit-sharing clause in the proposed Mining Bill, with the projected affected people.

"The Aussie move will have an adverse impact on power and steel prices and a cascading impact on infrastructure sector and consumer goods," said Amber Dubey, Director- Infrastructure at global consultancy firm KPMG.

"Australia caters to 60-70 per cent of global coal exports along with a major chunk iron ore exports in the world. So, any kind of new tax will be passed on to the importers," an analyst with Karvy Comtrade said. (*)