Govt, miners talk of mining tax compromise
Both sides tone down rhetoric; hope to cool tensions ahead of election
Author: James Regan (Reuters)
Posted: Wednesday , 02 Jun 2010
CANBERRA (Reuters) -
mineweb.com
Australia's government and miners talked on Wednesday of a compromise over a planned mining tax that has hurt local markets and unnerved investors, with both sides looking to cool tensions ahead of a looming election.
Speaking at a mining industry summit, Resources Minister Martin Ferguson said the government was open to negotiation on all aspects of the controversial tax on mining profits, except the headline rate of 40 percent.
"We know you are concerned about things like retrospectivity, the treatment of minerals with different outlooks and cost structures, and taxing points," Ferguson told the miners, who are backing a multi-million-dollar campaign to overturn the tax.
"We are looking at ways your concerns can be addressed, for example, through generous transition arrangements," he said.
Ian Smith, chief of Newcrest Mining Ltd (NCM.AX), Australia's biggest gold miner, and chairman of the mining industry's main lobby group, said differences over the tax were not insurmountable, but the government needed to be more flexible.
"We are currently a long way apart. We are willing to sit down and engage constructively with government, but all key design elements must be on the table," Smith said.
The conciliatory tone was a departure from heated comments from both sides that have seemed to leave little room for compromise since the government announced the tax last month, demanding a fairer share for Australians from the resource trade.
The war of words, which included miners' threats to pull billions of dollars in investment and government accusations of a scare campaign, have unnerved foreign investors, helping to drag down both the local currency and share market.
The Australian dollar AUD= has lost 10 percent in a month, mainly due to concerns about the global fallout from Europe's debt crisis but it has also been hurt by concerns over the new tax, which is scheduled to be introduced in mid-2012.
"BALDERDASH AND BUNKUM"
Only on Tuesday, Prime Minister Kevin Rudd described the miners' threats of pulling investment as "balderdash" and "bunkum" and vowed to go ahead with the new tax.
Ferguson would not discuss the progress of negotiations over the treatment of existing mines which, though subject to the tax along with new projects, could receive big offsetting tax breaks to reduce the real effective tax rate to below 40 percent.
But he said the government would not be rushed and talks with the miners could go beyond an election expected around October, which Rudd is expected to win despite fast-falling support from voters raising the prospect of a hung parliament.
The Minerals Council of Australia, which is leading tax negotiations with the government, said the industry wanted talks opened to include the 40 percent headline rate, the application of the tax to existing projects, the definition of a windfall profit and the removal of state-based royalties.
"The international investment community is saying, 'what are you doing, do you understand the ramifications of what you are doing, not just for your industry but for this country as a whole?'" council chief executive Mitch Hooke said.
Miners bought new ammunition to the conference to back their fight in the form of a report by accounting firm KPMG showing gold and copper mines would be unviable under the new tax, while the net present value of new coal mines would be halved.
Rudd has declined an invitation from miners to address them at a traditional dinner at parliament on Wednesday night, prompting conservative opposition accusations he was running away from a confrontation that could further dent his voter support.
Opposition leader Tony Abbott has promised to overturn the tax if he wins office. (Reporting by James Regan; Writing by Rob Taylor and Mark Bendeich; Editing by Alex Richardson) |
