Windfall TaxRe: JH38 and others
Ok if the windfall tax isn't the right approach, what is? Noone here would like any increased tax/royalty of any kind.
It is totally the right move for the government. The concept of the windfall tax is to divert any excess profit to the government but still protect the miner by making the economics of its project feasible with a modest return on investment. There is no way copper is going below $0.90 with the rise of Asia and the inevitable long-term decline in the value of the U.S. Dollar.
Talking about GDP growth is misleading and is a statistic that is used because it favors the U.S. What does $130,000 per person in GDP mean for a potential $100 billion economy (if there are hundreds of mines created)? If 90% of it is mined by foreign corporations then Mongolia is left with a GNP of $10 billion. The key here is where does all the income go? Well most of it to us (the shareholders), the company, other foreign firms (mining equipment) and maybe a few million dollars for wages in Mongolia (the bulk of which will go to expatriates). There is a difference between production and where all the income goes.
Do i agree with the concept of the windfall tax, yes! Do I agree with 68%, no! I'm thinking 30-40% is reasonable.
P.S. this is for the financially inept ppl who keep talking about hundreds of billions of dollars Ivanhoe is sitting on and the stock shooting the moon: IT'S CALLED NPV (NET PRESENT VALUE), look it up!
This is still a great long-term stock that can double with the signing of a stability agreement, however I personally don't think it's a $100 stock.