Hand wringing about the collapse of Australian mining sector investment is premature
John Robertson
PortfolioDirect
Hand wringing about the collapse of Australian mining sector investment is premature. Spending on mining industry construction, equipment and exploration in Australia amounted to $101.0 billion in 2013, according to data from the ABS, only $882 million less than in 2012 but still $32.6 billion more than in 2011. Profits before tax of $55.9 billion in 2013 sounds to some like an industry ripe for a super profits tax until it dawns that this is a mere 10.6% pre tax return on the capital invested in the Australian industry over the past 15 years. Since 2008, the industry has invested an extra $358.4 billion without any increase in profits. We should be thankful for a slowdown in this debt fuelled investment binge when the returns are so low. The weak return on capital also highlights why a super profits tax gets such anaemic results.
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John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business strategist and investment market professional for over 30 years after starting his career as a Commonwealth Treasury economist in Canberra. Since being Australia's top-rated commodities analyst and chief economist at one of Australia' leading stockbroking firms, he has advised companies across the mining, consumer products, IT and biotech sectors on their equity market relations. He leads the firm's investment evaluation and security structuring activities on behalf of the Australian Small Scale Offerings Board (ASSOB), the world's first equity 'crowdfunding' investment platform. John Robertson discusses the interaction of mining and investment markets in his weekly 'From the Capital' column in Mining Journal.
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John Robertson
PortfolioDirect
John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...
Expertise
No areas of expertise
John Robertson
PortfolioDirect
John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...
Expertise
No areas of expertise
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