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Xstrata halts sites in super tax protest

XSTRATA ratcheted up pressure on the Australian government over its controversial resources tax yesterday by suspending two projects in Queensland and putting A$22bn (£13bn) of investment on hold.

The mining giant said it would no longer be economically viable to spend A$586m on a coal site in the Surat Basin and a copper facility in Cloncurry given the prospect of a 40 per cent super-tax on profits. In the first serious clash Xstrata said the move would cost 3,250 jobs.

A further A$22bn of investment, which could create 15,000 positions for Australian workers, has been put under review by the London and Zürich-listed behemoth.

Mining companies exploded with fury when Prime Minister Kevin Rudd confirmed plans for the Resource Super Profits Tax (RSPT) last month. Industry executives say the levy is unfair because it does not take into account the funding costs and risks borne by groups and their shareholders.

Rudd stirred further discontent by suggesting Xstrata was already planning to halt work on the two Queensland projects. Rudd’s accusation was angrily refuted by a spokesperson in London who said it was “simply not true”.

“This is not a publicity trick or a pressure campaign, this is business sense,” the spokesperson said.