Australians don't need a complex and costly mining tax to reap the benefits from the resources sector. In fact all we need is a stock-broking account. Which is usually free to set up!
What's more, given the global exposure of many resources companies, we can also benefit from projects operated in other countries.
Rio Tinto Limited (ASX: RIO) is our biggest iron ore miner and the second largest producer in the world, behind Brazil's Vale. It also has operations in copper, aluminium, energy (coal, uranium etc.) and diamonds. Thanks to its reliance on iron ore (90% of group earnings), which has fallen around 40% in price recently, Rio's shares have been sold down heavily.
Although a volatile and somewhat risky investment, I remain confident in the miner's ability to generate greater shareholder returns over time, particularly as demand for uranium, copper and aluminium grows.
Woodside Petroleum Limited (ASX: WPL) is our biggest independent oil and gas company with significant assets off the coast of Western Australia where its North West Shelf project can be found. Woodside's CEO Peter Coleman recently stated he'll look to grow the company organically through exploration and investment in current projects rather than through acquisitions. At current prices, Woodside could be a viable alternative to the big banks and Telstra for dividend income.
Another oil and gas producer which investors might want to keep an eye on is Senex Energy Ltd (ASX: SXY). Its share price has recently experienced a large amount of volatility following the announcement of FY14 results, which showed a 38% drop in net profit.
However, today it announced an asset swap with QGC – a BG Group business – which has significantly improved Senex's 2P reserves position and will likely make investors confident it can execute on its FY18 production strategy. With no additional capex spend forecast as a result of the deal, the swap appears to make perfect sense for Senex's management and shareholders.
Buy, Hold, or Sell?
I own shares of Senex and warrants in Rio Tinto (see my disclosure, below). However with growing production and a forecast fully franked dividend yield over 5%, Woodside has appeal at current prices and could represent a solid buying opportunity.
