“Experts” stuff up negotiation

If you ever needed a lesson in the pitfalls of negotiating under pressure, take a look at the mess created by the agreement of the terms of the revised Mining Resources Rent Tax between the large miners, and the Federal government . If it wasn’t so serious, it would be funny.

In simple terms, the deal which set MRRT rates was with the Federal government, but the states own the resources, and already do, and will continue to levy, a royalty payment on tonnes extracted.

The miners thought the MRRT rate was inclusive of any increase by the states in Royalties, so they had a reliable ceiling on the total tax paid, the Feds say no such condition was agreed, and the states are cash strapped, and looking for revenue, where better than the miners in a boom.

All parties stuffed up royally by making assumptions in a pressure cooker negotiation, and not articulating them in the discussions, and written agreement.

This is easy to do under pressure, but these guys are supposed to be experts, so it is unbelievable that such a basic oversight occurred. The lesson is that whatever you do, take some time away from the scramble and pressure of “completing” a negotiation before an agreement is executed to ensure all the bases are covered.

 

About strategyaudit

StrategyAudit is a boutique strategy and marketing consultancy concentrating on the challenges of the medium sized manufacturing businesses that make up the backbone of our economy. The particular focus is on their strategic and marketing development. as well as the business and operational efficiency improvements necessary for day to day commercial survival. We not only give advice, we go down "into the weeds" to ensure and enable implementation.
This entry was posted in Management, Operations, Personal Rant and tagged , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s