Sarissa Resources Inc (SRSR)

[downsideup]

"Australia's Mineral Resource Rent Tax, which goes into effect July 1, places a 30 percent tax on the profits..."

So, that now has Australia leaping 1/3 of the way to being Bolivia, in one step ? A bit more, really, I suppose, given that the new tax clearly isn't the only tax...

A bit more again as the policy appears very clearly targeted to damage "some" more than others, in ways that aren't really overly consistent with the principle of "equal protection" or other values that are generally consistent with the far more predictable degree of stability that occurs under the proper rule of law.

I still don't know how that has the Aussie's comparing to other jurisdictions in relation to "total" cost... but, the trend sure is ugly, and it may well be that it is the trend that matters far more than the absolute value in the immediate taking of more than 1/3 of the value of prior mining investment... given the 1/3 interest being taken isn't paired with any investment being made.

I think the "trend" revealed is also not likely to be constrained by borders as some may expect that it is. The global impacts, both economic and political, will transcend borders... as what Australia does clearly will alter the relative position in the market of others in the global economy... including, say, Brazil, and Canada... ???

It clearly will result in making minerals "more expensive"... in ways that will have extended market impacts, including making some previously "borderline" projects elsewhere appear suddenly quite viable... and some viable projects in Australia will suddenly be seen as having new obstacles and less value.

I guess, if nothing else, that perhaps makes Quantum's insistence on getting the rocks they mine in Australia, out of Australia... before they bother with building any profit into them... appear quite a bit more rational in light of this new 30% tax than it appeared before seeing the impact it will have ?

Seems likely to me, still, that expropriating an additional 30% now is very likely to alter the global competitive landscape in mineral exploration quite significantly, probably in ways that might well make other opportunities outside of Australia suddenly appear lower in risk as well as truly more economic than they were prior to the change in value of Australia's minerals.

That some Aussie politicians obviously "don't get it" in terms of the necessary market impact of their choices... isn't the point, for us...

Finding those potentials elsewhere that will benefit more from their putting a very heavy finger on the scales... is the point.

Perhaps you'll first see that impact in an immediate shift occurring in exploration focus and priorities long before you begin seeing any real evidence of shifts in larger transfers of investment $ to other regions.

Looking at it broadly in terms of market impact... Canada and Africa appear likely to be the largest potential beneficiaries of Australia's policy changes... while only Canada appears to offer the sort of political and market stability that really works to insulate current investment from exposure to those sorts of risks.

The resources tide is still coming in, but, Australia just made their Australian ores 1/3 more dense, with all the density added being in gangue and waste. The ships holding their ores are now riding lower in the water by 1/3 for the same value in the minerals they hold. There will be a lightening of their future loads that results... while others ships were just lifted a bit higher in the water by the same 1/3. Australia's choice has made the water beneath others hulls appear suddenly more dense by that same 1/3... allowing them to load 1/3 more value in each ship ?

That's the linear impact. The larger market impact... may well mean that the shift being imposed results in formerly "economic" deposits becoming "non-economic" in relation to others... while others that were "non-economic" in relative terms, are now quite suddenly made "more economic" than some of those that are already in production now.

A 1/3 shift... is huge. It WILL alter the math in determining the relative utility of new investment allocations.

It's a fairly dramatic example of why you want to diversify your mine sources and mining interests broadly enough... that it enables easily shifting focus between sources as what's economic changes... without the requirement imposing large impact in cost or in market disruptions.

If Australia is your only source... your cost just went up by 1/3 and there's nothing at all to be done about it.

If there are comparable or cheaper alternatives... Australia just opted to lose that portion of the business they could have done that others will now take instead.

Got niobium ?

SRSR does.