Carbon Tax Effect

I am trying to balance my precious metals portfolio and wondering how this carbon tax coming in will effect these shares, depending on where they earn their money. For example:

MML (Earns 100% of its revenue in the Philippines)
TRY (Earns 92% of its revenue in South America)

as opposed to:

PRU (Earns 98% of its revenue in Australia)
SLR (Earns 100% of its revenue in Australia)

Does anybody understand the effect the tax will have on the Australian companies? Will the companies earning their revenue predominately overseas have a destinct advantage?

Please feel free to correct my calculation:

1 litre of diesel produces ~2.88 kg of CO2
347 litres of diesel produces 1 tonne of CO2
1 tonne of CO2 costs $23 in tax
so the price of diesel will increase 6.6 cents per litre.

Diesel is obviously a huge part of any mining cost.

Interestingly FMG are far more concerned about the MRRT than the Carbon Tax

cheers
Surly

Surly said:

Please feel free to correct my calculation

Click to expand...

You're close enough to not worry about any minor variations.

The only real exception will be if the diesel has to be road freighted huge distances to get to the mine. Eg you burn three quarters of the fuel at the mine, and the other quarter trucking it all the way there in the first place. I don't know if there's any gold mines actually doing that, but it's not impossible.

Also, consider that natural gas, coal and things produced from them (most notably electricity) will also rise in price. Depending on the nature of the operation, some mines use lots of electricity either from the public grid or from their own power station on site (usually fuelled by diesel or gas although in the past a few mining companies have built their own coal or hydro power schemes).