Fortescue Joins Protest Against Australian Mining Tax

18 May 2010 (Last Updated May 18th, 2010 18:30)

Yet another mining company has pulled the brakes on mining projects in Australia. This time it is Australian iron ore miner Fortescue Metals Group, which has put $15bn-worth of projects on hold while it reviews the potential implications of the country's proposed new mining tax.

Yet another mining company has pulled the brakes on mining projects in Australia.

This time it is Australian iron ore miner Fortescue Metals Group, which has put $15bn-worth of projects on hold while it reviews the potential implications of the country's proposed new mining tax.

Fortescue said it is putting its $9bn Solomon Hub project and $6bn Western Hub development on hold due to the proposed 40% resource tax Australia says could be implemented in 2012.

Fortescue said its review will focus on the funding implications of the imposition of the new tax onto projects that were financed before the proposed tax was announced.

The company warned that the 'super profit' tax, if implemented, will make it impossible to arrange financing for the projects.

The Perth-based miner said 30,000 people could be impacted as the projects are put on hold – most of which are employed in constructing and operating the projects.

Fortescue joins BHP Billiton, the world’s largest mining company, and Rio Tinto which have also put major projects on hold because of the proposed levy.

Earlier this week, Australian Resources Minister Martin Ferguson said the government recognised the new tax could hurt investment and aimed to negotiate with the miners on the tax.

Australian Treasury official Ken Henry, however, rejected any compromise over the mining super profits tax warning that any remodelling would turn into a subsidy for miners.