A NEW Australian tax on miners that will cost the industry A$7.7bn (£4.82bn) over the next two years has passed its biggest hurdle so far.
After 18 months of acrimonious debate that brought down former leader Kevin Rudd, politicians agreed to back Australian Prime Minister Julia Gillard’s 30 per cent profit tax in return for minor concessions.
London-listed shares in Rio Tinto fell as much as three per cent in trade yesterday, before recovering to close the day down 2.3 per cent at £29.86. Woes in the Chinese economy also weighed on the stock.
Gillard wants the new tax on mining profits to pay for a company tax cut and boost payments into worker pension funds, to spread the benefits of Australia’s resources boom to parts of the economy struggling with the global downturn.
In 2010, mining companies ran a public campaign against Rudd’s original 40 per cent tax plan, feeding into a voter backlash that has seen opinion poll support for Gillard and her Labor party remain near record lows.
The mining tax, which is being closely watched by other resource nations in South America and Africa, is a key policy for Gillard, who struck a deal on the tax with global miners BHP Billiton, Rio Tinto and Xstrata in July 2010.
Industrial and Commercial Bank of China, the world’s biggest lender by market value, said it was already starting to see mining projects in Australia being held up due to the impending mining tax.
“We now have already started to perceive part of the unwillingness to proceed with some of these projects,” Han Ruixiang, the head of ICBC Australia, told a business lunch in Melbourne.
City A.M. Reporter