Australian High Court dismisses Fortescue’s lawsuit challenging mineral tax

7 August 2013 (Last Updated August 7th, 2013 18:30)

The Australian High Court has unanimously dismissed the world's fourth largest miner Fortescue Metals' lawsuit, which challenged the validity of mineral resource rent tax (MRRT).

mining

The Australian High Court has unanimously dismissed the world's fourth largest miner Fortescue Metals' lawsuit, which challenged the validity of mineral resource rent tax (MRRT).

Under the MRRT, companies are liable to pay 22.5% on profits above $75m, from iron ore and coal production, after deducting state royalties.

The company, backed by the Western Australian and Queensland governments, argued that the tax is not levied uniformly across the country since royalty fees differ from one state to another.

The High Court, however, ruled that the MRPT Act and the Imposition Act did not discriminate between state mining royalties and also that the acts did not give preference to one state over another, reported The Australian.

Chief Justice Robert French said: "The differential treatment and unequal outcome that is involved here is the product of distinctions that are appropriate and adapted to a proper objective."

The federal government, commending the court's decision, noted that the ruling affirms sound constitutional basis for the tax that was introduced in July 2012.

"Fortescue challenged the MRRT because it was an unreasonable intrusion into an area of state responsibility."

Forstescue Metals chief executive Nev Power, though disappointed, accepted the ruling.

"Fortescue challenged the MRRT because it was an unreasonable intrusion into an area of state responsibility and it was also an unfair, discriminatory and complex tax," noted Power.

Meanwhile, the future of the mining tax may be under question, as the opposition leader Tony Abbott claimed that if Liberal-National coalition is voted to power in the upcoming polls, it would scrap the tax.

"The mining tax will be gone as of the 1st of July next year, if you vote for the coalition," Abbott said.

The challenging environment in the resource industry of the country has, however, grossed $200m in the first year against previous expectations of $2bn in 2012 - 2013.


Image: under the MRRT, companies are liable to pay 22.5% on profits above $75m from iron ore and coal production after deducting state royalties. Photo: courtesy of Freedigitalphotos.net.

Energy Technology forum on LinkedIn