Australia’s Super Profit Tax: What the Media Says

16 June 2010 (Last Updated June 16th, 2010 18:30)

The debate about Australia's controversial super profit mining tax rages on. Get up to speed on what is being reported in the international press.

Australia’s Super Profit Tax: What the Media Says

20 May

The Independent: Fortescue Metals registered the biggest protest so far against the Australian Government's planned profits supertax on the resources industry when it said yesterday that it is considering shelving $15bn (£10bn) worth of projects in the country. The group, an Australian iron ore specialist, said that it would withhold the investment unless Kevin Rudd's administration shelved or substantially watered down the proposals.

The Telegraph: We aren't opposed to a profits tax but we are interested in a tax reform that encourages investment," Bill Champion, managing director of Rio's Australian coal business said.

22 May

Reuters: Australia's planned new 40% tax on mining profits is justified and unlikely to adversely affect investment in the long term, the head of the Organisation for Economic Cooperation and Development has said.

23 May

Financial Times: Australia's large superannuation groups have united to back the government's controversial plan to fund changes to the pension industry by hitting the mining industry with a 40% tax on all profits above the long-term government bond rate.

26 May

Reuters: Global miner Rio Tinto Ltd said on 26 May it was concerned that other nations could follow Australia's lead by introducing a windfall tax on mining profits.

"Uncertainty over the tax proposal has wiped billions of dollars off Australian mining firms' market value."

Australia's new super profits tax, due to come into effect in mid 2012, has angered the mining industry, which has warned it puts mine expansions at risk and could push investment overseas.

Uncertainty over the tax proposal has wiped billions of dollars off Australian mining firms' market value and added to pressure on the Australian dollar, which is leveraged to the Asian growth story and has lost 11% against the US dollar since the tax was announced in early May.

31 May

Reuters: The [Australian] government is locked in negotiations with more than 80 mining companies on details of the new super profits tax. The 40% headline rate appears set in stone, but the government appears more flexible on the definition of a super profit, and may compromise by increasing the threshold for the new tax rate, currently set at around 6%.

3 June

Associated Press: Anglo-Swiss mining company Xstrata has raised the stakes in a protest over Australia's plans to glean more taxes from the sector, announcing Thursday it will halt investments in two projects in the country and put the creation of 3,250 jobs at risk.

Xstrata's move appeared to confirm critics' fears that pushing ahead with the tax, currently proposed to come into force in 2012, will deter big miners from making new investments.

The Australian: A new poll suggests advertisements designed to sell Kevin Rudd's A$12bn mining tax are failing, despite the prime minister spending A$38m of taxpayers' money on the campaign.

"The Chilean mining industry stands to benefit from the stir the proposed resource super profits tax is causing."

Polling released yesterday by Essential Research suggests 36% of people find the mining industry ads warning the resource super profits tax will damage the industry to be more believable than Canberra's ads promoting the 40% tax; 33% of the 1,045 respondents found [the government's] ads more believable, with 31% unsure.

10 June

ABC News: The corporate regulator says mining companies need to ensure they comply with continuous disclosure rules, when making statements during the debate about the proposed resources super profits tax.

The Australian Securities and Investments Commission says the directors of resources firms need to work out whether they have enough information to form a view on the ABC impact of the tax, when making statements to financial markets.

11 June

Sydney Morning Herald: Treasurer Wayne Swan has signalled the government expects to begin finalising the design of its divisive mining tax soon.

12 June

MarketWatch: The Chilean mining industry stands to benefit from the stir the proposed resource super profits tax is causing among miners in Australia, said Chile's Mining Minister, Laurence Golborne.

14 June

Dow Jones: Australia's Finance Minister Lindsay Tanner said the government can't fix a timetable for any deal with the mining industry over a planned new tax on resource sector "super profits".

The Telegraph: While "concerned" about the proposed 40% tax on mining company super profits, the Chinese owners of iron ore business Sinosteel Midwest are committed to their West Australian iron-ore business.

"They'll keep looking and seeing what it does to the cashflows," Sinosteel Midwest chief operating officer Giulio Casello said yesterday.

But Mr Casello said Chinese investors were "still very committed to the region".

"Australia's proposed tax on super profits in the resources sector would make the country less competitive."

15 June

MiningWeekly.com: Australia's proposed tax on super profits in the resources sector would make the country less competitive and would undermine its position in the international investment community, [Bob Every], the chairperson of industrial conglomerate Wesfarmers warned on Tuesday.

"A 40% rate for a super profits tax, in conjunction with corporate income tax of 28%, will result in a significant increase in the total effective tax rate and will negatively affect Australia's competiveness," he said.

Sydney Morning Herald: Treasurer Wayne Swan has rejected suggestions from mining giant Rio Tinto that the federal government has not consulted it about the controversial mining tax.

"This is not true. There have been numerous discussions with the company and they should not be pretending otherwise," a spokesman for the treasurer said.

Rio Tinto has said it has still not held talks with the federal government on the proposed 40% resource super profits tax.