Producers of Commodities in Australia will shortly face a cost of production double whammy brought on by the Labour governments eminent Carbon Emmissions tax and Mining Tax.
Effectively these new costs associated with producing key commodities such as iron Ore, Nickel, Silver and Gold will drive up the price as companies such as Rio Tinto and BHP pass these increased costs of production onto their consumers.
The effect of these new taxes to the primary resources sector of Australia will be higher prices for all those who demand commodities for industry and for investors (in the case of Gold and Silver).
The Carbon tax will drive up the cost of electricity and to those industries that produce carbon as a byproduct of production.
Ultimately this will put upward pressure on the supply side price and drive all commodities higher in what should result in a decrease in demand, however demand for industrial metals is currently fierce with booming economies such as China, India and Brazil the new “higher” price equilibrium may not result in a decreased demand as these nations are less elastic and sensitive to price than they have been in earlier decades due to the stage of their currencies and booming growth, also a lack of competition aids Australia’s primary producers.
Though consumers will lose out with their energy bill set soar by up to 100% in the next few years, it looks like commodity prices have another supply-push factor driving up prices and with ample demand the future looks rosy for this key commercial Australian business sector.
By Joseph Gale
Effectively these new costs associated with producing key commodities such as iron Ore, Nickel, Silver and Gold will drive up the price as companies such as Rio Tinto and BHP pass these increased costs of production onto their consumers.
The effect of these new taxes to the primary resources sector of Australia will be higher prices for all those who demand commodities for industry and for investors (in the case of Gold and Silver).
The Carbon tax will drive up the cost of electricity and to those industries that produce carbon as a byproduct of production.
Ultimately this will put upward pressure on the supply side price and drive all commodities higher in what should result in a decrease in demand, however demand for industrial metals is currently fierce with booming economies such as China, India and Brazil the new “higher” price equilibrium may not result in a decreased demand as these nations are less elastic and sensitive to price than they have been in earlier decades due to the stage of their currencies and booming growth, also a lack of competition aids Australia’s primary producers.
Though consumers will lose out with their energy bill set soar by up to 100% in the next few years, it looks like commodity prices have another supply-push factor driving up prices and with ample demand the future looks rosy for this key commercial Australian business sector.
By Joseph Gale
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