As the saying goes money talks and bullshit walks...look and listen Krudd this is a reality and freight train coming.
http://www.perthnow.com.au/business/...-1225875342861
JPMorgan cuts BHP, Rio stake because of proposed resource super-profits tax
* Matt Chambers
* From: The Australian
* June 03, 2010 10:00PM
ONE of the world's biggest resource fund managers has sold down a quarter of his BHP Billiton and Rio Tinto holdings because of Kevin Rudd's proposed 40 per cent tax on mining profits, which he described as a "wake up call".
JPMorgan Chase's Ian Henderson said Rio had been his biggest investment, about 4.5 per cent of the $US7 billion ($8.2bn) of resource assets under his control, but he had reduced his holding by about $US100 million.
He said also that he had made a "reasonably significant" reduction in his holdings of Fortescue Metals Group because of the proposed tax, but the JPMorgan resource funds had increased their holdings in gold miners.
"I'm sorry to say we've reduced our Australian exposure," Mr Henderson told Bloomberg.
"It's been a wake-up call, frankly. I had not thought that the changes in Australia would be quite as drastic as they are proposed to be."
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Related Coverage
* Warning: Tax risks capital flight: ANZ
* Xstrata in warning over $6bn coal project Daily Telegraph, 8 hours ago
* Tax hits mine workers The Australian, 15 hours ago
* Rio Tinto intensifies tax attack The Australian, 4 days ago
* UK investors urged to join protest against profit slug The Australian, 10 days ago
* Australia at top of risk list: Rio boss The Australian, 10 days ago
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Mr Henderson, who is based in London, manages JPMorgan's Global Natural Resources fund.
"It clearly does reduce the attractions of developing new projects in Australia and indeed investing in Australian-based mining ventures," he said.
"It has made people aware of the potential for these industries to be used as milk cows by governments. That has altered the risk profile for the mining industry probably for quite a long time."
Mr Henderson's comments back up claims from international and local mining companies that their big shareholders are seriously worried about the negative effects the tax will have on investments in Australia.
Xstrata chief executive Mick Davis said the government's planned tax changes meant mining projects in Australia would now need a higher rate of return to balance the added uncertainty.
"Investors will also expect higher project returns to justify the increased risk of investing in Australia," he said.
Rio chief Tom Albanese said yesterday on Sydney radio 2GB that he believed the mining tax had weighed on his shares.
But a look at the performance of the world's top-five miners since the tax plans were announced early last month does not back the claim.
Rio and BHP, with falls of 2.5 per cent and 4.5 per cent, respectively, have outperformed Vale, down 7.5 per cent, Xstrata, down 6.8 per cent, and AngloAmerican, down 5.9 per cent.
Those three have less Australian exposure than BHP and Rio.
Mr Albanese said he felt like he had been "sucker-punched" by the Rudd government on the tax.
"Over the past year, we have been assured that we would be given the opportunity to provide input," Mr Albanese said.
"And I felt like I got sucker-punched when the thing came out (without any consultation)."
He emphasised the strength of the Australian economy, compared with the rest of the world, during the global financial crisis.
"I've been travelling all over the world last year, in the depths of the recession, and the only place anywhere in the world where people were actually in restaurants was in Australia as they were the only ones in the world that had any money," he said.