Mining boss says tax has killed two big projects

CANBERRA: Mining magnate Clive Palmer says he has shelved two big projects because of the Australian Government's proposed tax, including one that would have created 3000 jobs.

The Queensland billionaire and Coalition backer has been a vocal critic of the federal Government's proposal to tax mining profits by 40 per cent, saying it threatens to destroy the industry.

He says he has cancelled mining exploration plans in South Australia, and there will be no expansion of a billion-dollar iron ore project in the west.

That project would have delivered 3000 direct jobs and A$2 billion ($2.5 billion) a year in exports, he estimated.

"There are [also] projects that we haven't announced that we've been planning that we have to stall on," Palmer told the ABC.

The Government has accused Palmer - a major financial backer of the Liberal National Party in Queensland - of talking about projects that do not exist. He was forced to admit that his A$6.5 billion mine project in Queensland's Galilee Basin will go ahead as planned, but said the tax would block any expansion works.

"We shouldn't be happy with a A$6.5 billion project. We should want a A$20 billion or a A$30 billion project."

Palmer said he would prefer a tax on the rich, like himself, rather than a tax that would have a roll-on effect for the whole of the country.

He argued that the profits tax had already dented Australia's reputation overseas, with South Africa and South America destined to benefit.

Alumina, partner in the world's biggest producer of the material used to make aluminium, said the mining tax might not have a significant effect on its domestic operations.

Chief executive John Bevan said the tax might be imposed on its low-value bauxite mining operations and not the higher-value alumina processing units, and that was why Alumina was not as concerned as other companies. Bauxite is processed into alumina and then aluminium.

Alumina's partner Alcoa this week said the proposed tax risked driving investment and jobs away from Australia. The impost might cut 9 per cent of Alumina's valuation if imposed only on the bauxite mining, said Credit Suisse Group in a report.

Melbourne-based Alumina owns 40 per cent of the Alcoa World Alumina & Chemical venture and Alcoa the rest. The venture produces a quarter of the world's alumina, which is refined into aluminium.

- AAP, Bloomberg

FAIRER FOR INDUSTRY AND TAXPAYERS: SWAN

CANBERRA: Treasurer Wayne Swan has staunchly defended the Rudd Government's planned super-profits resource tax as mining companies ramp up their opposition to the move.

The Government, in response to the Henry tax review, wants to slug mining companies with a 40 per cent tax.

Swan said the Federal Government was replacing an inefficient royalty regime which penalised mines, miners and shareholders.

"The regime we are talking about putting in place is a profits-based tax and of course when companies are much more profitable, the return to the Australian people is higher," he said.

"But when profits are lower, this is a tax which encourages many of those mines that have been punished and penalised by an archaic and unfair royalties regime."

Mining industry bosses, including Fortescue Metals Group chief Andrew Forrest, have banded together to oppose the tax, saying it will harm not only mining but also Australian families.

Forrest said all projects which required substantial capital, including Fortescue, would be under review.

Swan said the Government's plan was reasonable.

"We are putting in place a set of arrangements which are reasonable, which will return to the owners of the resource, that is the Australian people, a fair share which has fallen away dramatically in recent years," Swan said.

"There have been one or two owners of mines out there making all sorts of extreme and hysterical statements."

The Minerals Council of Australia launched a print advertising campaign yesterday stating the industry had paid A$80 billion ($100.2 billion) in taxes during the past decade and declaring "that's a fair share".

- AAP