UPDATE: Mine Tax Outcome Critical To Investor Confidence -Mining Lobby
01 Octubre 2010 - 4:01AM
Noticias Dow Jones
Global mining companies' confidence in Australia will depend on
the work of a government panel tasked with refining the country's
mining tax plans, the country's top mining lobby said Friday.
While expressing support for revisions of the planned tax
proposed by the government, the Minerals Council of Australia said
that it had a "small policy window" to prevent investor views of
the country's mining regime from deteriorating.
"A lot of work needs to be done in a relatively short space of
time to turn around negative perceptions and to reinforce investor
confidence in Australia as a premier destination for minerals
production and investment," the Minerals Council said.
In a response to an issues paper produced by Australia's
Department of Resources, Energy and Tourism Friday, the body warned
that competition from Asia, Africa and Latin America could threaten
Australia's dominance of iron ore and coal, the two commodities to
be taxed under the government's planned Minerals Resource Rent
Tax.
The issues paper was released ahead of meetings due over the
next two months of the government's Policy Transition Group, a body
composed largely of former and current mining and energy
executives, which is to refine the final form of the tax.
In the paper, released earlier Friday, the Policy Transition
Group said it would expect to receive submissions from interested
parties by Oct. 28.
The Minerals Council's strident opposition to a previous version
of the tax, the Resource Super-Profits Tax, helped contribute to a
mood of political uncertainty leading up to the internal party coup
in late June against Australia's former prime minister Kevin
Rudd.
Prime Minister Julia Gillard revised the tax as the MRRT within
a week of arriving in office after consultations with BHP Billiton
Ltd. (BHP), Rio Tinto PLC (RTP) and Xstrata PLC (XTA.LN), cutting
the tax rate to an effective 22.5% and removing it from all
commodities but coal and iron ore.
But heavy losses in mining seats from the states of Queensland
and Western Australia states have left Gillard hanging onto power
after Australia's Aug. 21 election thanks to the support of four
Members of Parliament outside her governing Labor party.
In its submission to the MRRT's policy transition group, the
Minerals Council highlighted its support for the current version of
the tax, describing the change as "a positive step and an
opportunity to draw a line under the uncertainty created by the
RSPT".
However, other mining groups have opposed the revised tax.
Andrew Forrest, chief executive of Fortescue Metals Group Ltd.
(FMG.AU), the country's third-largest listed iron ore miner, has
characterised the proposals as a stitch-up by the big three
companies.
"The designers meant to penalise anyone coming behind them
wishing to develop infrastructure," he said at a conference in
Sydney this week.
A key concern for smaller miners will be the treatment of
certain less-profitable forms of the commodities, particularly
magnetite iron ore and brown coal.
In its issues paper, the PTG said that it "is inclined to the
view that beneficiation processes would be beyond the taxing
point," meaning that the tax would be applied at an early stage of
production, before the miners begin any significant processing of
the ores.
That may be more attractive to magnetite miners, who claim to be
confident that the government will exempt them from the heaviest
effects of the tax.
The issues paper also suggested that "the taxing point is not
intended to capture operations in which the resource is consumed on
site as part of an integrated project", an exemption that could be
positive for TRUenergy, an electricity utility owned by Hong Kong's
CLP Holdings Ltd. (0002.HK) which is Australia's biggest consumer
of brown coal.
OneSteel Ltd. (OST.AU), which mines large quantities of iron ore
for use in its own blast furnaces, might also benefit from such an
exemption.
-By David Fickling, Dow Jones Newswires; +61 2 8272 4689;
david.fickling@dowjones.com
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