Heavy Capital Outlay For B.H.P.

Press, Volume CVI, Issue 31168, 19 September 1966, Page 21

Heavy Capital Outlay For B.H.P.

(N.Z. Press Association—Copyright)

MELBOURNE, September 17.

The Broken Hill Proprietary Company hopes the recovery of Australian Steel demand will continue to a point when it does not need to accept export sales at unduly low prices, the chairman (Sir Colin Syme) told the annual meeting yesterday.

The general low level of export prices was causing concern in all steel exporting countries and was because of the fact that installed world capacity was in excess of demand. “There is no sign of an early change in this situation,” he said. Referring to capital expenditure Sir Colin said that while it would fluctuate during the year it was expected to continue at a high level. On the other hand shareholders needed to bear in mind that natural gas, petroleum and further iron ore developments might call for considerable outlays. “In the case of natural gas this may occur very shortly,” he said. Liquidity Last year the company had spent 126.7 m dollars on capital works—by far the highest ever spent in one year. Liquid balances of the group had declined to 41.6 m dollars, a drop of 25.1 m, and directors had decided to make an issue Of debenture stock underwritten to 30m dollars with the right to accept oversubscriptions up to a further 10m. Sir Colin said the W.A. Mount Newman ore project “is a very large one indeed and will call for heavy capital investment.” B.H.P. was preparing to challenge the Taxation Commissioner’s new interpretation of sections of the Income Tax Act under which special concessions were available where a taxpayer had incurred spending of a capital nature on plant ore development of a

mining property and associ ated works.

In the past the company had gained considerable benefits from these concessions which were, of course, designed to be an encouragement to taxpayers engaged in mining operations. Recently the Commissioner had reviewed the departmental interpretation and had informed the company that much of what it had regarded and in fact been allowed as necessary plant and development would not now be so regarded and allowed.

Sir Colin said that this matter of tax had had an important effect on last year’s profit figures and could have a more important effect in future.