Tuesday, June 15, 2010

Freeport-McMoRan (NYSE:FCX), Southern Copper (NYSE:SCCO) and Australian Super Tax

Freeport-McMoRan (NYSE:FCX) and Southern Copper (NYSE:SCCO), along with Chile, could be the major beneficiaries of the misguided 40 percent tax proposed to be implemented on Australian miners.

Any project located in Australia with over a 6 percent rate of return is subject to the tax.

Chile has smartly responded with their own proposal, a royalty bill which allows a variable tax rate of between 3.5 percent to 9 percent.

Chile's Mining Minister Laurence Golborne said this last week when talking to reporters about the issue, "The situation in Australia is a tremendous opportunity for Chile, if we can offer the mining sector stability and tranquility. Let them know that our tax schemes are stable over time."

Over 33 percent of global copper production comes out of Chile.

Both Freeport-McMoRan and Southern Copper have strong operations in the area, which could strongly benefit them and their shareholders over the next year or two, or as long as Australia keeps the super tax in place, which supposedly only a temporary measure.

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