This announcement from today puts all the claims from the mining industry and its media, lobbyist and political mates that the proposed resources profits tax has caused a “capital strike”, damaged Australia’s reputation and will make it harder to finance projects in this country in sharp relief.

The Queensland coal industry, led by BHP Billiton and Xstrata — two of the loudest opponents of the proposed tax — are bidding $4.85 billion for the Queensland Government rail network in the coal producing areas of the state. The Queensland Government is flogging the Queensland Rail coal track network via a public float, but the coal industry wants control so it can duplicate its control of the rail assets that BHP and Rio are maintaining in their iron ore businesses in Western Australia.

Today’s announcement quotes the chairman of the industry group, former NSW Liberal Premier, Nick Greiner, who joins two other former Liberal leaders, John Hewson and John Brogden, in giving the lie to the “kill the golden goose” line.

Greiner says in the statement “the fully funded offer represents a substantial premium to what is likely to be achieved under the Queensland Government’s proposed Initial Public Offering (IPO), or realised in recent comparable transactions.

Importantly, our offer is able to be settled with the Government prior to the IPO and will not be dependent on volatile equity markets, removing major risk for the State while also providing early settlement.” (our italics)

Greiner goes on “…we have considered the alternative model under the IPO and associated regulation and legislation and strongly believe it does not represent an optimal or even reasonable basis for assuring the future of the State’s major export industry. The QCIRG offer has four goals: to encourage fair and open access, optimise network performance, enable early system expansions, and encourage rail haulage competition, all with flow-on benefits through enhanced investment, employment and royalties. The members of QCIRG are committed to expanding the network to support future growth and in addition to the offer, QCIRG has established a facility to fund the current QR capital plan and also further rail capacity growth.”

Apart from the rosy future, what’s the significance of Greiner’s statement? Big deals like this require big finance.

So which banks haven’t been scared off stumping up new money for Australian resource infrastructure deals like this proposed offer?

Well, let’s see: locals ANZ are there. BNP Paribas, one of Europe’s biggest banks, is there as well. Citibank is there too, the US bank still part owned by the American Government. Not only are the three underwriting the proposed purchase to the tune of $1.35 billion, but they will finance a maintenance and capex facility totalling “in excess of $2.05 billion”.

That’s a real vote of confidence that the money will come rolling in from higher coal exports.

And which company is a member of the industry group? Why Rio Tinto, whose CEO, American Tom Albanese only yesterday claimed the proposed tax raised questions about sovereign risk in Australia. In fact, every one of the companies involved have either criticised the proposed tax or they have supported the various industry groups and political commentaries bagging it: Anglo American Metallurgical Coal, BHP Billiton, Ensham Resources, Felix Resources, Jellinbah Resources, Macarthur Coal, Peabody Energy, Rio Tinto Coal, Vale Australia, Wesfarmers Resources and Xstrata Coal. The statement says all have “signed equity Subscription Agreements. Aquila Resources and New Hope Coal Australia are supporting parties and “have the opportunity to provide equity at a later stage.”

All these companies are entitled to their views on the tax (and should try and get the best deal for themselves and their shareholders), but this proposed purchase exposes the hypocrisy underlying their reaction: if they really felt Australia was no longer a place where investment could be made, they simply would not be in this deal. End of story.

Then again it’s not just the miners.

A Crikey tipster has pointed out that Colin Barnett (who has just jacked up mining royalties) has announced that the Mid West WA Oakajee port development is under threat due to the RSPT. Only problem is, the RSPT will have negligible on mid-west iron ore miners as their product is low grade and will requires processing downstream before being exported.

The ‘mine gate’ price of the ore won’t yield much in the way of super profits, as the value-adding will be at the next production stage where the ore is upgraded to a useable product. Even the Oakajee Port boss said he wasn’t aware of any evidence the RSPT was undermining the project development.

The “debate” over the RSPT is increasingly boiling down to a simple contest between the Government and a number of huge, mainly foreign companies that are systematically lying about the impact of the tax — as demonstrated by their own actions — and who have in effect hired the Opposition in order to run a political campaign of obstruction.

These are very large, very wealthy companies used to getting their way with most of the governments they deal with. In an hitherto unseen demonstration of backbone, the Rudd Government has dared to take them on. And as Ross Gittins has pointed out, they’re deeply concerned that other governments will follow our lead. This is not just about the extra tax the biggest miners will be paying here, but about the extra tax they’ll find themselves paying overseas as well.

But as always, don’t look at what they say, look at what they do. And they’re spending up big here.

Peter Fray

Help us keep up the fight

Get Crikey for just $1 a week and support our journalists’ important work of uncovering the hypocrisies that infest our corridors of power.

If you haven’t joined us yet, subscribe today to get your first 12 weeks for $12 and get the journalism you need to navigate the spin.

Peter Fray
Editor-in-chief of Crikey

JOIN NOW