Australian Mining Digs In Against Possible Tax Hikes
April 12 2012 - 09:44PM
Dow Jones News
Australia's mining industry has launched a pre-emptive strike
against the threat of further tax increases, resurrecting the "keep
mining strong" slogan used two years earlier to thwart a proposed
super profits tax.
The Minerals Council of Australia began Friday running full-page
advertisements in newspapers cautioning against possible new or
increased levies in the Labor government's next budget. The ads are
set to run in major papers over the coming days into next week.
Under a headline saying the industry is "not a bottomless pit,"
the council says mining already pays 500% more taxes and royalties
than 10 years ago and will soon have to pay new mining and carbon
taxes introduced by Prime Minister Julia Gillard's government.
The council--which represents major minerals producers including
BHP Billiton Ltd. (BHP), Rio Tinto PLC (RIO) and Xstrata PLC
(XTA.LN)--had agreed an advertising truce with Gillard in mid-2010
after its intensive campaign against the planned super tax rattled
support for the government and led to the ouster of then Prime
Minister Kevin Rudd. Gillard went on to water down the mining tax
and narrowed its focus to coal and iron ore after consulting with
the industry.
"We are concerned that after the new mining and the carbon
taxes, two new imposts that will cost mining about A$6 billion on
top of the A$23.4 billion we're paying in company tax and
royalties, that we might be faced with significant new taxes," said
Ben Mitchell, director of public affairs at the council.
"As we say in the ad, we would like some fiscal stability so we
can get on with the job of delivering projects," Mitchell said.
The council for now is limiting the ad campaign to print, but
said it isn't ruling out other measures.
As the government gears up to release its budget next month,
media speculation has increased it may include measures such as
cutting diesel fuel rebates and exploration concessions. The Greens
party, whose support helped Gillard form a government, has called
for increased taxes on some mining costs and for the new minerals
resources rent tax to be broadened to cover gold and other
commodities.
Analysts and investors have increasingly questioned whether
mining companies can continue the pace of investment in massive
projects to ramp up production of metals and minerals given costs,
turmoil in European economies and slowing demand from key consumer
China.
Industry executives, including BHP Chief Executive Marius
Kloppers and others, have repeatedly warned companies are being hit
by cost increases.
"In a number of our commodities, we've seen prices come down,
particularly in processing-oriented activities like aluminum,
manganese metal, nickel and so on, which combined with high costs
is making life difficult for some of those operations," Kloppers
said Thursday in Canberra.
-By Robb M. Stewart, Dow Jones Newswires; +61 3 9292 2094;
robb.stewart@dowjones.com
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