Fortescue’s Ore Growth Threatened as Anti-Tax Ads Set to Resume
August 01, 2010, 2:31 AM EDTBy Rebecca Keenan
Aug. 1 (Bloomberg) -- Fortescue Metals Group Ltd. said the Australian government’s proposed mining levy threatens to stop its A$17 billion ($15 billion) expansion in Western Australia as an industry body resumes an anti-tax advertising campaign.
“It could potentially derail a massive investment into the economy,” Fortescue Chief Executive Officer Andrew Forrest said in an interview on Australian Broadcasting Corp.’s Inside Business program today. “It will have a very, very severe impact on that decision,” to expand output to 95 million tons a year from 55 million tons a year.
Prime Minister Julia Gillard scaled back a proposed 40 percent tax on mining “super profits” to a 30 percent levy on iron ore and coal profits after ousting Kevin Rudd in June.
Fortescue, the nation’s third-biggest producer of iron ore, said last month it may seek financing for the $9 billion Solomon project once there is more clarity on how the compromise minerals tax will be implemented. It put the Solomon project and the $6 billion Western Hub projects on hold when the original tax was announced in May.
“All we know is that there are fundamental issues which are still in secret, we can’t get answers for and therefore we can’t really model it,” Forrest said.
Smaller Australian mining companies will restart an advertising campaign against the government’s compromise mine tax, the Association of Mining and Exploration Companies Inc. said last week. Gillard negotiated the compromise deal with BHP Billiton Ltd., Rio Tinto Group and Xstrata Plc.
The tax will cost jobs and deter investment and should be withdrawn to allow consultation with the industry, said the association, which represents small and mid-size mining companies including Fortescue.
--Editors: Ed Johnson, Paul Tighe
To contact the reporter on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net.
To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net.
