For the past year, the banks have delivered to shareholders with income and capital gain. In the run-up to their next results, it might be time to consider taking some scrip off the table and pocketing a tidy profit.
For APRA, bigger always seems to be better. But as this state of the nation report into superannuation highlights, size doesn’t count for everything when it comes to delivering member benefits.
Coal companies sink as Queensland ups royalties
Three new tiers will be added to Queensland’s coal royalty structure from July 1 as the Palaszczuk government attempts to take a bigger slice of the recent spike in coal prices.
The new structure will include a 20 per cent royalty for an average price above $175 a tonne, a rate of 30 per cent on the average price above A$225 and a rate of 40 per cent on the average price above $300.
Budget papers forecast the new revenue stream will add an additional $1.2 billion over the next four years to support the 2022 budget, which includes sizeable investments in health and infrastructure.
Subsequently, the share prices of coal companies with operations in Queensland took a tumble.
Stanmore Resources (ASX: SMR) fell 9.8 per cent, Terracom (ASX: TER) dropped 15.4 per cent and Coronado Global Resources (ASX: CRN) was off by 6.9 per cent.
The worst performer was Bowen Coking Coal (ASX: BCB) which plunged 39.1 per cent, given all of its exploration is located in Queensland.
While the industry knew royalty hikes were inevitable after a ten-year freeze, it doesn’t make it much easier to swallow. Clearly, the market took the new structure by surprise.
Queensland Resources Council CEO Ian Macfarlane said the new tiers were a short-term political move to fix a hole in the budget:
“This decision from the government will have a flow-on effect on the cost of living through higher electricity prices, higher construction costs and higher-priced consumer goods that will add to inflation and impact every Queenslander,”
The Government says the new tiers are designed to ensure Queenslanders are fully compensated for the state’s limited and valuable resources.
Coal prices have soared over the past year as conflict in Ukraine, weather disruptions and site closures limited global supply. Furthermore strong demand from China from exporters outside of Australia has temporarily distorted market prices.
Average coking coal prices are up 221 per cent over the past year. Meanwhile, thermal coal prices are up over 260 per cent since 2020.
The existing structure already includes 7 per cent applied to a value of up to $100 per tonne, 12.5 per cent to values up to $150 per tonne, and 15 per cent to values above $150 per tonne.
The royalty will be applied at the margin. For example, an average selling price of $250 will be taxed as 7 per cent for $100, 12.5 per cent for $50, 15 per cent for $25, 20 per cent for $50 and 30 per cent for $25.
Information warning: The information in this article was published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169
