Australia, the world’s biggest exporter of iron ore, alumina and coal, could become the highest-taxed mining nation if a 40% resources tax is enforced, Citigroup said.

Citigroup analyst Craig Sainsbury told Bloomberg Australian royalties-taxes are already some of the highest in the world and warned further increases could severely curtail investment and the competitiveness of the resources sector.

Australian Treasurer Wayne Swan said he will release Treasury Secretary Ken Henry’s review of the nation’s tax system on 2 May.

The review could contain a proposed 40% tax rate to replace a 30% corporate tax and state-based royalties of between 2-8% for mining companies.

Citigroup added that gold and copper companies, which pay royalties of 3%, will be most affected while coal producers, which pay about 6-8%, could suffer less, according to Bloomberg.

An enforced 40% tax could reportedly cut the earnings of BHP Billiton by 19% and Rio Tinto by 31%.

Australia has the third-highest taxes of any mining nation with a total tax burden of 35%, behind the US and Brazil, according to Bloomberg.