Mining industry claims triumph over Henry tax as Rudd goes

The mining industry could barely contain its collective glee yesterday as Australia's new Prime Minister, Julia Gillard, offered fresh talks on the country's proposed resources super tax, which the miners have spent millions of dollars campaigning against over the past two months.

The change of policy from the Canberra administration comes after Ms Gillard deposed the former premier, Kevin Rudd, ahead of a general election later this year. The development will have been met with cheers in the boardrooms of London-listed Rio Tinto, BHP Billiton and Xstrata which, along with others operating in Australia, have openly opposed the 40 per cent levy, known as the Henry tax.

One source at a major UK miner said that Mr Rudd's removal was because of the tax's widespread unpopularity.

It wasn't. While Mr Rudd was criticised for his inflexible stance, a higher levy on the industry remains popular with many sections of Australian society, most of which do not have the funds to organise a campaign similar to the one orchestrated by the miners.

In fact, Mr Rudd was forced out after backtracking on a promise to implement a carbon trading scheme.

Ms Gillard immediately withdrew a government advertising drive in return for a similar concession from the industry, which used the change of prime minister to reassert its case for the scrapping of the levy.

"Rio Tinto has no doubt the Resources Super Profits Tax was flawed policy and that it has already caused damage to Australia's reputation and the national economy. Rio Tinto believes it is fundamental that the negotiation process ensures any tax reform proposal is not applied retrospectively, and delivers an effective tax rate that retains Australia's international competitiveness as an investment destination," the Anglo-Australian company said in a statement.

"As a sign of good faith, Rio Tinto has suspended its national advertising campaign on the mining tax in line with today's request by the Prime Minister.

"Rio Tinto says this commitment is dependent on the Government's willingness to properly engage on the fundamental principles outlined above."

Rio Tinto is likely to be the hardest hit if the tax comes into effect, seeing its effective tax rate in Australia rising to about 57 per cent. BHP Billiton and Xstrata issued similar statements.

Last month, Mr Rudd insisted that the charge was necessary to ensure that Australians got a fair deal from the profits made by mining companies.

"The Australian people deserve a fair return on the resources which they themselves own," he said.

Arguing that some of the biggest miners are largely foreign-owned, and that these groups had made $80bn (£53bn) over the last 10 years, Mr Rudd said: "At the same time governments, on behalf of the Australian people, have received only an additional $9bn over that period.

"That means these massively increased profits, built on Australian resources, are mostly, in fact, going overseas."

Resources groups have complained that the tax could be imposed retrospectively, while also threatening that it could jeopardise investment. The collapse last month of the takeover of Macarthur Coal, an Australian miner, was blamed on the proposed levy.

Industry analysts differ on whether the tax will now be killed off, but agree that the change of leadership in Canberra could extend the period of uncertainty for the sector. "We still believe the Australian Labor party will look to implement a mining tax," said Olivia Ker at UBS.

"However, following today, it seems almost assured that a diluted version of the initial version of the [Henry tax] will eventuate. However, given the proposed new negotiation, the resolution of details may now be further in the future, opening up a longer period of uncertainty for the miners."

Indeed, news of Canberra's softer position did nothing for the miners listed on the London Stock Exchange, which tracked down yesterday after the US Federal Reserve warned that the recovery in the US economy faced the prospect of running out of steam.

The comments increased the pressure on the sector's shares, which are typically about 10 per cent down on three months ago, largely as a result of the uncertainty created by the prospect of the Henry tax.

While most of the miners operating in Australia have said that they are reviewing operations, the outstanding project in the country, Rio Tinto's and BHP Billiton's huge $116bn proposed iron ore joint venture in Pilbara, Western Australia, will go ahead if the two companies can persuade the worldwide competition authorities to give the project the green light.

The two agreed a deal to pay higher royalties to the state government in Western Australia earlier this week, but the deal still faces a number of regulatory hurdles.

Sport
footballLIVE City face Stoke, while Warnock returns to Palace dugout
Arts and Entertainment
books
Life and Style
3D printed bump keys can access almost any lock
gadgets + techSoftware needs photo of lock and not much more
News
i100
PROMOTED VIDEO
Arts and Entertainment
Inside the gallery at Frederick Bremer School in Walthamstow
tvSimon Usborne goes behind the scenes to watch the latest series
Life and Style
Silvia says of her famous creation: 'I never stopped wearing it. Because I like to wear things when they are off the radar'
fashionThe fashion house celebrated fifteen years of the punchy pouch with a weighty tome
Arts and Entertainment
Gregg Wallace in Summer's Supermarket Secrets
tv All of this year's 15 contestants have now been named
News
i100Steve Carell selling chicken, Tina Fey selling saving accounts and Steve Colbert selling, um...
Life and Style
A picture taken on January 12, 2011 shows sex shops at the Paris district of Pigalle.
newsThe industry's trade body issued the moratorium on Friday
Arts and Entertainment
Could we see Iain back in the Bake Off tent next week?
tv Contestant teased Newsnight viewers on potential reappearance
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
News
i100
News
The slice of Prince Charles and Princess Diana's wedding cake and the original box from 29 July 1981
newsPiece of Charles and Diana's wedding cake sold at auction in US
Voices
The Ukip leader has consistently refused to be drawn on where he would mount an attempt to secure a parliamentary seat
voicesNigel Farage: Those who predicted we would lose momentum heading into the 2015 election are going to have to think again
Arts and Entertainment
Cara Delevingne made her acting debut in Anna Karenina in 2012
film Cara Delevingne 'in talks' to star in Zoolander sequel
Sport
Mario Balotelli pictured in his Liverpool shirt for the first time
football
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Network Engineer (CCNP, CCNA, Linux, OSPF, BGP, Multicast, WAN)

£35000 per annum: Harrington Starr: Network Engineer (CCNP, CCNA, Linux, OSPF,...

DevOps Engineer (Systems Administration, Linux, Shell, Bash)

£50000 per annum: Harrington Starr: DevOps Engineer (Systems Administration, L...

Data Scientist (SQL, PHP, RSPSS, CPLEX, SARS, AI) - London

£60000 - £70000 per annum: Harrington Starr: A prestigious leading professiona...

Financial Technical Consultant (C++, C#, Finance, MSc, PhD)

£50000 per annum: Harrington Starr: Financial Technical Consultant (C++, C#, F...

Day In a Page

Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

The phoney war is over

Russian troops and armour pour into Ukraine
Potatoes could be off the menu as crop pests threaten UK

Potatoes could be off the menu as crop pests threaten UK

The world’s entire food system is under attack - and Britain is most at risk, according to a new study
Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
From Mozart to Orson Welles: Creative geniuses who peaked too soon

Creative geniuses who peaked too soon

After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
Caught in the crossfire of a cyber Cold War

Caught in the crossfire of a cyber Cold War

Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

Salomé: A head for seduction

Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

British Library celebrates all things Gothic

Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

Is the Hard Rock Café worth fighting for?

The restaurant chain's owners are currently embroiled in a bitter legal dispute
Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

In search of Caribbean soul food

Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
11 best face powders

11 best face powders

Sweep away shiny skin with our pick of the best pressed and loose powder bases
England vs Norway: Roy Hodgson's hands tied by exploding top flight

Roy Hodgson's hands tied by exploding top flight

Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

Di Maria and Ronaldo: A tale of two Manchester United No 7s

They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone