The government's revised Minerals Resource Rent Tax released Friday greatly reduces the number of mining companies affected by the new tax compared with that of the original proposal.

The plan will apply only to iron ore and coal and be applied at a rate of 30%, as opposed to 40% under the original proposal, while the existing offshore petroleum resource rent tax will be extended to onshore companies.

The exclusion of commodities other than iron ore, coal, and onshore oil and gas means the number of affected companies will be cut to around 320 from 2,500, the government said.

Some of Australia's biggest listed domestic miners, including Newcrest Mining Ltd. (NCM.AU), Alumina Ltd. (AWC.AU) OZ Minerals Ltd. (OZL.AU), Lihir Gold Ltd. (LGL.AU), and Iluka Resources Ltd. (ILU.AU), would be largely unaffected thanks to their concentration on other commodities.

The plan also introduces a threshold of A$50 million annual resource profits before miners incur a tax under the iron ore and coal regime.

Among Australia's listed iron ore and coal miners, only BHP Billiton Ltd. (BHP), Rio Tinto Ltd. (RTP), Fortescue Metals Group Ltd. (FMG.AU), Macarthur Coal Ltd. (MCC.AU), Mount Gibson Iron Ltd. (MGX.AU), Centennial Coal Co. Ltd. (CEY.AU), Whitehaven Coal Ltd. (WHC.AU), Grange Resources Ltd. (GRR.AU), and New Hope Corp. (NHC.AU) have breached that level of operating profits since 2005.

Several offshore miners, such as Xstrata PLC (XTA.LN) and Anglo American PLC (AAL.LN), will likely be included in regime.

Among other companies listed in Australia, OneSteel Ltd. (OST.AU) also recorded A$161.9 million in operating profits from iron ore mining in 2009, and Wesfarmers Ltd. (WES.AU) made A$915 million in coal mining profits in the same year.

"It's a long way improved from the original resource super profits tax," said David George, a mining analyst at JPMorgan in Sydney.

Analysis by JPMorgan prepared before the new tax proposal and based on a 5% uplift rate and 28% corporate tax rate, rather than the 7% uplift and 29% rate under Friday's proposal, posits a target price of A$38.80 for BHP Billiton, A$92.53 for Rio Tinto, A$4.01 for Fortescue, and A$5 for Centennial.

That compares to share prices at 0140 GMT of A$37.38, A$65.84, A$4.12 and A$4.49.

George said the target prices would, if anything, probably be increased by the latest changes in the tax proposal.

 
   -By David Fickling, Dow Jones Newswires; +61 2 8272 4689; david.fickling@dowjones.com
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