Miners say they will flee Aussie tax
THE world’s top miners have said they will scale down their operations in Australia if the Government goes ahead with plans to slap a 40 per cent tax on mining profits.
According to mining chiefs at BHP Billiton, Rio Tinto and Xstrata, the plans by the Australian government will hamper long-term investment in the country, while ruining its global competitiveness.
London’s markets are in for a rough ride today, as mining companies make up 14 per cent of the FTSE-100 index. More than $14bn (£9bn) of value was wiped off mining stocks by Australian investors yesterday, and shares in London listed miners, including BHP Billiton and Rio Tinto, are expected to follow suit.
Mergers and acquisitions activity in Australia’s mining sector could also be jeopardised by the tax. According to analysts Peabody might pull its $3.7bn bid for Macarthur Coal after its shares dropped 9.5 per cent, while there are also doubts over BHP and Rio’s proposed Australian iron ore production joint venture.
The Australian government has made the tax a centrepiece of its re-election agenda this year and is set to come into effect from July 2012.
In the process it has picked a fight with the country’s most important single industry, which accounts for about half of exports. The money from rich miners will be used to boost workers’ pension funds.
Prime Minister Kevin Rudd, said Australians had been short changed during a 10-year resources boom, in which profits soared by A$80bn (£49bn), while only A$9bn flowed into national coffers. Glyn Lawcock, at UBS estimated the tax would cut Rio’s 2013 earnings by 21 per cent and reduce BHP’s by 17 per cent.