Moreton fights federal government on R&D cash for coal gasification
Moreton Resources is weighing up its options to defend a tribunal ruling ordering the diversified minnow to pay $9 million in tax because it was not eligible for a R&D rebate.
The Administrative Appeals Tribunal upheld a decision by Innovation and Science Australia that underground coal gasification is a known and proven technology and Moreton’s (ASX:MRV) activities in that area were not considered research and development.
Gasification is a process that converts organic or fossil fuel-based material into synthetic gas and carbon dioxide.
Shareholders did not respond well to the news sending shares down 12.5 per cent to 0.7c on Thursday morning.
“This decision is currently under review by the board and, whilst a final decision is yet to be made, it is likely we will appeal this decision,” executive chairman Jason Elks told investors late yesterday.
“In the meantime, the company will review its options on the potential appeal and advise the market.”
R&D a bone of contention
Moreton has questioned the decision, saying it is aware of some other controversies surrounding the R&D funding of similar projects elsewhere in Australia.
R&D rebates are a contentious issue for junior miners after Scott Morrison, when he was the federal treasurer and not the prime minister, said he planned to cap annual refunds at $4 million for companies with less than $20 million turnover.
Several miners have been vocal about the topic – which Stockhead will explore in depth tomorrow.
Northern Minerals (ASX:NTU) chief George Bauk said in July that the policy is not good news for miners.
“Many people probably didn’t even think about it and didn’t understand the connectivity to the mining industry,” Mr Bauk said.
“Unfortunately, with tough times they are cutting the R&D. We’re talking about [science, technology, engineering and maths], we’re talking about the future and unfortunately some policy makers aren’t connecting all the dots.”
Lithium Australia boss Adrian Griffin says the federal government needs to review its R&D tax incentives as they relate to energy metals, to allow the required technologies to be developed rapidly.
“Without these technologies being commercialised in Australia, we can be assured that most of the value will continue to flow to other countries.”
The Australian Tax Office has given Moreton time to go through the appeals process before it has to repay the cash. If it is unsuccessful in having the decision overturned, it will have 21 days to make the payment.
At the end of August, Moreton declared its first full-year profit of $11.3 million despite having no producing operations.
The windfall came from its acquisition of the Granite Belt silver mine – assets worth $13.3 million – for just $10,003.
But it only had $1.3 million cash in the bank at the end of June and it is in the process of completing a $2.2 million rights issue.
Stockhead is seeking comment.