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(MINEWEB) Forrest and Chinese companies fire new broadside on mining tax

Forrest and Chinese companies fire new broadside on mining tax
This week the crème de la crème of global businessmen gathered in Sydney for the Forbes Global CEO Conference and some of their number blasted the minority Federal Gillard Government's intent to introduce higher taxes on iron ore and coal projects.
Author: Ross Louthean
Posted: Wednesday , 29 Sep 2010

PERTH -

Late this afternoon the chief executive of Australia's big new iron ore producer Fortescue Metals Group Ltd (ASX: FMG), Andrew "Twiggy" Forrest fired a new salvo at the intent of the Gillard Labor Government to persist with a Minerals Resource Rent Tax (MRRT).

Forrest said there were now infrastructure and mining investment concerns over the MRRT - indicating clearly he has little confidence in a pending independent study on the merits of the tax.

He said future investment in infrastructure is penalised by the MRRT because it doesn't allow infrastructure investment to be deducted against the tax. The tax suits only those players who already have their own infrastructure and who have always denied third party access.

"The three big mining companies deliberately designed this tax with no tax deductibility for infrastructure," Forrest said of the negotiations Rio Tinto, BHP Billiton and Xstrata held in Canberra for a new tax regime to placate the Government's thirst for revenue.

"Without infrastructure access or investment there will be no new mines. These three big miners know this and they are trying to shut the door to new entrants," Forrest said.

He considered the MRRT Transition Policy Group's inability to address infrastructure funding and construction -- crucial to development of new mines, jobs and export revenue - as being a clear indication of the Government's failure to recognise the impact of the MRRT on infrastructure development.

"The Government should encourage infrastructure development, instead they are inadvertently frustrating it," Forrest said.

"Under the proposed MRRT we will see the streets of Australia's mining industry empty of mining companies other than for these big players. When you look back you can blame the MRRT when those streets are all called BHP and Rio."

The Fortescue chief said that according to mining analyst estimates, BHP Billiton, Rio Tinto and Xstrata will pay less than A$1 billion (US$997 million) in MRRT revenue to the Government in the first year, casting further doubt over the design of the tax.

The tenuous position of the Gillard Government was shown on opening day today when her Government suffered a defeat in the House of Representatives - the first time a Government has suffered a Parliamentary defeat in the Lower House for more than 70 years.

Meanwhile, at the Forbes Conference and in China there was criticism reported today on the mining tax, with The Australian newspaper saying Chinese steelworks are upset with the extra tax Rio Tinto, BHP and Xstrata will pay on their coal and iron, for those costs would be passed on to Chinese steel mills.

Earlier this week Steve Forbes of the Forbes magazine empire told the high profile billionaires and multi millionaires attending the conference that Australia's top income tax rate should be cut to as low as 17%.

The world's richest man, Carlos Slim Helu, proved to be a thorn for the Gillard Government by saying its proposed A$43 billion (US$41.7 billion) national broadband proposal was far too expensive and too inflexible, and could be outmoded in a few years time. Financing the national broadband move was seen as being partly funded by increased taxes on Australian mining, with the sector believing that eventually other metals and minerals - notably gold and nickel - could be hit by elevated taxation.

Helu, ranked by Forbes magazine as being worth US$53.5 billion, has made much of his fortune from the communications business.

Labels: AUSTRALIA, GEORGE FORREST, WINDFALL TAX

posted by MrK @ 6:40 PM