Australia's Finance Minister: Won't Be Good For Any Mining Projects To Fall Through

Australia's Finance Minister Lindsay Tanner said Thursday his government doesn't accept that it would be good for any major resources projects to fall through as a result of a planned new 40% Resource Super Profits Tax.

It comes as Reserve Bank of Australia and Treasury officials--including Treasury Secretary Ken Henry, who devised the new mining tax--are reported to have indicated that if the tax slows new investment during a commodities boom, it wouldn't be such a bad thing as it will help prevent the economy overheating, according to local media reports.

"We do not accept any advice of that kind. We certainly do not agree with the assessment that that would be good for Australia, nor do we believe it is going to happen," Tanner told reporters.

In a rare public statement Thursday, Henry also defended the new tax, which has been strenuously opposed by the mining sector.

"It is the strong and clearly stated view of Treasury that the Resource Super Profits Tax will grow the mining sector and the economy," Henry said in emailed comments.

"The tax was constructed on that basis and the modelling released with the tax package clearly demonstrates it," he said.

Mitchell Hooke, chief executive of Australia's main mining lobby, the Minerals Council of Australia, reacted angrily to reports in The Australian and Sydney Morning Herald on Thursday that Treasury officials have suggested privately that the loss of mining projects could help ease capacity limits in the economy.

"It is inconceivable that Treasury would be, in private, arguing that the loss of jobs, investment in new and existing mining projects in Australia might actually be a good thing," Hooke said in a statement.

"Not only does this contradict repeated government claims that the new 40% tax will expand the mining sector, it flies in the face of nearly three decades of Treasury-sponsored reforms that made Australia one of the fastest growing economies in the developed world," he said.

"It begs the question as to which projects should or could fall over: those in the Hunter Valley, Central Queensland, the Pilbara, South Australia or somewhere else?"

Australia's proposed new mining tax continued to roil the industry this week, with Peabody Energy Corp. (BTU: 42.79, -0.63, -1.45%) on Monday cutting its bid for Australia's Macarthur Coal Ltd. (MCC.AU) to US$3.37 billion and Xstrata Plc (XTA.LN) announcing it has suspended a US$27 million project in North Queensland, citing uncertainty.

(from fox business, May 13, 2010)