Huge drop in value - Mining/Gas/Ag town - what to do??

The mining companies should be taxed a lot more than what they have been. Australia is one of the most resource rich countries and sickens me that we have people sleeping on the street, women and children forced to live in abusive environments and the mining companies are making obscene amounts of profit from the nation's resources. Tax the crap out of them.

 

And distributing most of the profits from australian resources to foreign shareholders.

Greens Call For Bigger Mining Tax Citing Foerign Ownership | smh.com.au

 

Sounds great lets tax the crap out of them so they cant function as a business.

They currently employ about 30,000 workers, so bye bye workers as we need to pay a larger tax bill. Don't want them to get rid of workers? Okay price of goods go up!

BHP share price is the same as what it was in 2005, lets tax them more!

Last year they axed about 17,000 jobs.

Nocookies

So lets tax them more they will not cut jobs? Of course they will as you have now hurt their profitability. This means less mines less jobs less money, either that or higher prices!

Remember the END USER ALWAYS PAYS.

 

Go buy their shares, easy solved.

 

Bahaha should we feel sorry the poor mining companies? Get a grip. Open your eyes, companies such as BHP take everything from Australia and give back very little. They dig up our natural resources and they sell it off for profit. What does Australia get for it? Zip.

 

Hi MBO,
Have you looked into how you might sell your property? I believe there are no buyers in the market you are in at the moment.

Are you having to put money into the property to hold it at the moment or is it funding itself?

 

Royalties
Taxes
Employment
Investment

What do you provide Australia?

 

Hi MBO,

Sorry I came late to the party. No offense you sound like you need to stop spending time justifying why your investment didn't work out and maybe spend some of the time looking at the mistakes that you may have made and learnt from them.

Couple of issues I have with your posts - firstly as someone who lives in a regional area, its generally the workers who don't want to live in the town but instead want to live in a capital city and do FIFO. During the height of the mining boom people were getting paid obscene amounts to do any job - why wouldn't the companies offer whatever accommodation the workers wanted? It wasn't even an option to pay more to get the workers residential, there was literally no one to hire so everyone was being picky.

As for not giving back to the region - thats not the companies job. They make profit & then the government taxes them what they think is an appropriate amount. This amount can then be spent on the community (similar to how all taxes work). If the government would rather give everyone $900 each to buy a new plasma (and hence the money flows straight overseas to the exporters), well thats their choice. Nothing to do with the companies. The companies are there to make a profit and will only do what is required of them to maintain a social license to operate. If part of that license is a requirement to house their staff residential (as per some mine lease requirements), then the company will do that. If no such agreement has been made, who is to fault the company or the government who stipulates the conditions?

I hate to say this but the demand for construction accommodation in mining & gas was never going to be maintained once a production phase is entered. I can understand how people of places like Ravensthorpe feeling cheated when the project didn't reach production, but I feel that is a little different.

For those talking about everyone being greedy and not thinking about everyone else, we'll I'd ask you to think about if property investment is really victimless? if it is how is it different to running a mining business?

 

I didn't read the whole thing. When you say you'll take a 150k hit, is that the transaction cost to get out? Or do you mean you've lost 150k in cap value. If it's the latter it shouldn't be important - sunk loss.

 

A wise man once told me to never argue with an Idiot because it is impossible to win......

 

That's the best you can come up with? lol

 

Well that all sounds lovely in theory but what happens is that once those royalties go to central government it doesn’t get back out to the regions. Instead it goes to Kevvy Rudd and his 300 person entourage to Copenhagen for climate change, or to Bronny Bishop or Tony Burke’s junket funds etc. I can guarantee you channeling government funds back to Chinchilla, Miles and Wandoan etc is not high on the list of any of the parties agenda, so their best bet for prosperity it to catch a few of the dollars before it flows downstream IMO.

Anyway this thread has gone well and truly off course unfortunately. I do agree with a lot of what THX says – we have pretty good corporates and they do contribute heaps to the wellbeing of the nation in so many ways. Of course its rational corporate behaviour to want to lower costs. Some of the mining company bashing by others here is just crazy. But the initial point that MBO makes (that has been missed by many here) is that these companies are not allowing the men the choice to live in the towns – they are compelled to live in the mens donger camps out of town. Now if they were given the choice a large percentage may well still choose the dongers, but some would choose to live with their families, have kids attend the local schools, support the shops etc. So the local communities improve directly. You might argue on first principles it is not the company’s legal responsibility to allow this, but it would send a much better message and might just improve productivity and reduce turnover in the workforce as well.
The responsibility to look after communities rests largely with councils and governments who approve these sorts of arrangements, and they can definitely influence corporate behaviour. They have dropped the ball on this occasion it would seem. That is why I suggested exerting pressure there instead of at the companies directly.
And I have pointed to findings that suggest better mental health outcomes, less suicides etc when the local towns are better supported and not ignored by the corporates. The right balance can be found, its not that hard, just sometimes the corporates might need a gentle prod now and then is all.
Respect all other opinions on the matter though.

 

G'day Lisa, yeah we're having to chip quite a bit in each week, not ideal but we can still manage but would rather not as its in a discretionary trust & the losses are quarantined there, looking at options at the moment with accountants. Yeah the market is quite flat there to say the least, no real sign of recovery in the near future however I've been speaking with associates in the industry who think it will bounce back over the next few years, time will tell. Not many users at present but there are still some, the house is also commercially zoned & is on a corner block close to a lot of ammenities & can be subdivided that's why we bought it as it had a lot of upsides to it. It did actually go up in value from there but the market corrected very quickly catching a lot of us out. If we were to sell at a loss we're looking at all ways to minimise the loss & get the most out of the sale. We could hang on financially for a while but for how long is it worth it. Are you the Lisa on Kaz's podcast, enjoy listening to them on way to work.

 

G'day Waldo, no offence taken, some have gone off on tangents here namingly THX, I'm not against companies making money or remaining viable in anyway shape or form nor am I against FIFO but in balance ie 70/30 with 70% being local depending on the remoteness of the location (this is a separate argument not related to what to do with regards to our house, Imy views are quite strong on giving people the option to bring there families to the area if they so decide, eg give them a choice don't make it mandatory that they have to FIFO, anyway enough said on that matter). We did our budgets on 30% of the timeframe of the life expectancy of the project. Look I'm not spending time blaming or justifying why it didn't work out, it still might. Others (not all) have weighed into the debate & the feedback has been good in some respects. I'm looking to take action hence putting it out there on this site for what experience others have had in similar situations & as to what they did right or wrong to trade out of it. Trying to put plans & steps in place. I don't like losing money no one does but the lessons I've learnt are much greater than any financial loss although it hurts in the short term.

 

Well said Foxy *****. Couldn't have out it any better myself. Also the main point of the whole thread was what to do with regards to the house. Sell & cut or wait & hold. Was looking for advice from others who've been in a similar situation & what they did to get out. Are you located in that region? If so have you been in touch with any of the chamber of commerce etc? I've prided around a few people putting the questions out there to try & prick a conscious with some, very hard tho.

 

Omnidragon if I sell I'll have approx $150-200K oweing to the bank to either get mopped up with equity elsewhere or to pay it off. 100% borrowed.

 

Not directly that region. I'm based in Toowoomba but had plenty of years in the Maranoa / Balonne area prior to that, so I get the importance of regional economies. Written to plenty of pollies over the years venting about various things. Also can't believe that one of my old drinking buddies from the 90's is now deputy PM. I dont have a direct link to the Miles Chamber, but I'd definately seek them out. With council elections coming up you could do worse then get in the ear of the local candidates as well. People power is an amazing thing.

 

IF you think the mining companies add nothing to Australia you might want to think again.

Without them we wouldn't have all the infrastructure and lifestyle we have today.

FYI over 50% of Australia's revenue comes from mining!

The mining industry's contribution to the Australian economy is now $121 billion a year. In terms of export income, it generates $138 billion per annum, which represents over half (54 per cent) of total goods and services. Across the nation mining employs 187,400 people directly, and a further 599,680 in support industries. In wages and salaries that amounts to $18 billion; an additional $21 billion is contributed through company tax and royalty payments. Not least, the industry spends $35.2 billion on new capital investment, $5.7 billion on exploration, and $4.2 billion on research and development.

Source: Australian Mining. Our contribution.

So this wise man that said not to argue with an idiot must of directed it at you.

 

I didnt say the mining companies add nothing, of course they have a place and we do need mining- don't get it twisted. They give back very little in comparison with what they take. They do not pay their fair share of tax and the revenue that they do pay is masked in royalties for raw materials that are owned by Australians anyway. They destroy agricultural land and they seemingly have no obligation to the communities that they destroy. Australia as a country has not become rich off of the resources boom but the mining magnates certainly have. People no doubt you admire Gina, Clive and Tinkler. The wise man in question would be disappointed in me wasting my valuable time in concocting a response to self serving individuals who understand nothing other than profiteering and greed. The opposite of what I stand for.

 

Hi MBO,

It's a really challenging market there at the moment. have you tallied up your annual holding costs are and looked at the total amount of negative cashflow for a few different scenarios, say 3 years, 5 years and 10 years to see if you can hold on for that long and if you do will it still be at a loss.

Regarding your losses, can you purchase a flip or a capital growth property in that same entity which will then mean the losses are offset when you sell the flip or capital growth buy and hold? If you were to buy something in the entity i think you would have to think about when you did. if for some reason you ended up liquidating the property or were forced into doing so (in the event you couldn't maintain the shortfall for some reason) your other asset would be at risk, which also might not necessarily be a bad thing if you want to get out without going bankrupt. Unless your loan would be covered in the event of a fire sale. (I am just thinking out loud here and obviously consultation with your accountants would be the best way to explore these ideas further).

From my understanding there are no projects with any significant work force on the agenda at the moment. The pipe project will be housing staff in portable camps due to its proximity away from towns. What leads your associates to think it will bounce back?

Yes, I am occasionally on The Everyday Property Investing Podcast with Kaz. I will be a bit more of a regular this year as of this week which I am excited about. I really enjoy it. Any topics you want me to pass on to Kaz for her to cover?

Let us know what (if anything) is determined with the accountants. I really hope your shortfall is easily manageable for you.