Just when things had cooled down, to a simmer at least, the heated dispute over Australian mining tax laws may be about to boil over.
The Labour Party struck a deal with mining heavyweights to replace the Resource Super Profits Tax (RSPT) with the more lenient Mineral Resources Rent Tax (MRRT) back in July 2010 but now, after a federal election appointed Labour to lead the country once again, details of the deal have been revised, and the barons aren't happy.
While a tax on earnings is not ideal for any company, the MRRT announced on July 2 this year, provided mining firms with a compromise. It would apply a much lower tax rate of 30%, compared with the previously proposed 40%, and would only affect coal and iron ore miners, which represent 85% of the total resource rents in the Australian mineral industry. The previous scheme would have taxed all mineral miners, regardless of differing profit ratings.
Queensland Resources Council chief executive Michael Roche explains: "The MRRT is not fully prospective, but it does provide for a more equitable entry value than the proposed Super Tax because it allows the use of market value (including mining rights) for the starting base (depreciated over 25 years)."
When the original RSPT law was announced in May, Rio Tinto chairman Jan du Plessis went as far as saying that it had the potential to "destroy" Australia's reputation. "I don't say these words lightly and I'm very keen to work with government to get to the right policy outcomes for the industry and for the nation."
Looking back on the previous proposal, Roche agrees with Plessis; he says that there were serious concerns about sovereign risk because the tax was to be applied to existing projects, not just future projects.
"The original proposal would have seriously damaged the financial viability of many, many projects in Australia and hand Australia a globally uncompetitive resources tax regime."
Xstrata even halted investment worth $500m, on two projects in Australia because of the proposed tax profits. The investment was reported to have been part of a $6.5bn development in both of the projects.
So the proposed mining tax law has been changed supposedly for the better. BHP Billiton chairman Jas Nasser said in a letter to his shareholders at the time of the MRRT announcement "We believe this decision to replace the earlier proposed tax with a better designed tax proposal is encouraging for the resources industry. A good foundation has now been established on which an effective tax can be implemented."
Rio Tinto managing director David Peever added "The Prime Minister's announcement follows constructive discussions over the past week between the Government and mining companies."
"There is, however, still a lot of work to do. As one of Australia's biggest taxpayers, Rio Tinto is committed to working constructively with the Government to ensure that the tax system continues to encourage investment in Australia," he said.
However, a new underlying problem with the MRRT has now come out of the woodwork and revolves around whether miners would be exposed to future increases in state royalties as the state collects the rent tax.
The original deal, struck between Rio Tinto, BHP Billiton, Xstrata and the Government in July, stated that "all" royalties paid to the state governments will be credited against any MRRT liability but now Gillard is saying that only "existing and scheduled" increases in royalties will be eligible for such accreditation.
BHP Billiton executives, who paid $6.3bn to Australian Governments last year and $3bn to the Commonwealth Government in company taxes, are said to be furious about this revelation after agreeing to pay an extra $1bn in iron ore royalties to Western Australia over the next four years - money which they doubt will be returned to miners under the new regime.
It has been suggested that BHP may even walk away from the deal it negotiated with the Australian Government four months ago.
But Roche strongly insists that the original deal will go ahead as promised "In recent industry submissions to the Policy Transition Group [PTG], the QRC has made it abundantly clear that MRRT taxpayers should not be caught in the middle of inter-governmental disputes over revenue shares."
"Industry has called on the PTG to recommend to the Australian Government that all state royalties be creditable against MRRT liabilities and that there will be no limitation on crediting future royalty increases. This position is consistent with the 2 July Heads of Agreement between the mining majors and the Australian Government," Roche continues.
Although the MRRT is high on the current political agenda, it is not set in stone. In order for the proposal to be imposed in 2012, the Labour Party must maintain the support of crossbenchers, who hold the balance of power.
After a dead heat election in August, where the Labour and Liberal parties each won 72 seats, Labour was able to form a minority government with the support of an Australian Greens MP and three Australian Independent MPs, resulting in a hung parliament. Two MPs pledged their support to the coalition.
For the MRRT to continue, Labour must also win the next election, to be held in 2013, because it is widely understood that the opposing Liberal / National Coalition party would not proceed with the tax on mining profits.
Whether the MRRT will be imposed is too close to call, but one thing's for certain; mining companies will be holding their breath until their country's leaders decide their fate.