Australia to propose tax incentives for critical minerals
The proposed law will set up a tax incentive worth 10% of relevant processing and refining costs for 31 critical minerals.
BHP Billiton (ASX:BHP), the world’s largest miner, revealed Wednesday it plans to keep ramping up iron-ore production in the face of plunging prices and a global oversupply of the steelmaking material.
Delivering its operational review for the year ending on June 30, the miner also said it would continue to focus on productivity improvements and disposals of non-core assets, almost two years after the mining industry began slashing costs following a decade-long investment boom.
BHP’s major vote of confidence in iron ore proves the company trusts it can mine the bulk commodity for less than many rival producers, and thrive even in an environment of weakening prices.
The mining giant dug up a record amount of iron ore in the fiscal year, up 19%, which beat analyst expectations, and its own forecasts.
The strong production figures, believe experts, should allow BHP to carry out plans to return cash to shareholders at its upcoming 2014 results.
BHP is not alone in the recent race to expand iron ore output. Fellow Australian miners Rio Tinto (LON,ASX:RIO) and Fortescue Metals Group (ASX:FMG) have also boosted their ore output as of late, even as the commodity price fell 30% in the first half to below US$100 per ton, plunging the steelmaking ingredient into a bear market in March.
Source: Index Mundi.
This supply surge has extended a global glut, damaging prices and forcing the closure of mines in China, the largest consumer of iron ore.
Australian investment bank Macquarie estimates around a third of China’s domestic iron-ore supply is unprofitable at current prices. BHP’s mines in the remote Australian Outback, on the other hand, are among some of the lowest cost to operate globally.
The company’s executives believe their aggressive efforts to reduce production costs over the past 18 months will help the company take a bigger slice of the market, even as growth in Chinese steel output slows.
BHP is scheduled to release full-year earnings on August 19.
Sydney-listed shares in the company gained 1.22% on the news, closing at A$38.98.
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