Xstrata scraps A$30m Australia expansion plan as new tax looms
Tuesday 11 May 2010
The growing row over Australia's proposed 40 per cent tax on mining profits intensified yesterday when Xstrata said it was halting copper exploration in the country.
The company said it needed more "certainty" about the so-called Henry tax before committing about A$30m (£18m) over the next three years. Its decision is the latest threat from the mining industry, which will face an effective tax rate of 58 per cent if the plans become law.
However, the Swiss-based miner is not cutting production in Australia. Steve de Kruijff, Xstrata Copper's chief operating officer in North Queensland, said: "Exploration activities are high risk and, while the targets we had identified are prospective, the proposed tax has introduced great uncertainty about the potential impact on the economics of developing resources into viable operations in Australia
"It would also change the relative economics of these prospects compared with exploration programs that Xstrata Copper is pursuing in other parts of the world."
The Henry tax also threatens to scupper the US coal giant Peabody's takeover of its Australian rival Macarthur. Yesterday, Peabody cut its offer from A$3.6bn to A$3.4bn, directly blaming the tax, which may be implemented in 2012. Macarthur rejected two bids of A$3.5bn before accepting Peabody's first offer.
One of the other potential suitors was Xstrata, which held talks about a takeover with the Australian firm's shareholders. Macarthur said last month that it understood these discussions to be "preliminary and highly conceptual".
Last night, Xstrata refused to comment about the negotiations with investors, or whether Peabody's revised offer would lead to Xstrata making a bid of its own.
BHP Billiton has said that its expansion plans, which include the massive Olympic Dam uranium mine, could be jeopardised by the new tax on mining profits. Its chief executive, Marius Kloppers, said on Sunday: "The uncertainty is in place, it would be very difficult to approve any of those projects."
Rio Tinto has also said it will review its Australian projects.
- 3 The enemy within: People who hear voices in their heads are being encouraged to talk back
- 4 Phil Neville backtracks on Tomas Rosicky 'I'd smash him' comments from Match of the Day 2
- 5 British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Paris attacks: Do not call Charlie Hebdo killers 'terrorists', BBC says
UK weather: Snow to fall in the coming week with sub-zero temperatures to last until early February
Asteroid narrowly scrapes past Earth: how to watch the closest space rock for decades as it flies by
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Prince Philip set to be knighted by Australia: Celebrate by reading his greatest gaffes
Nigel Farage: NHS might have to be replaced by private health insurance
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
Greece elections: Syriza and EU on collision course after election win for left-wing party
British Muslim school children suffering a backlash of abuse following Paris attacks
George Galloway condemns 'racist, Islamophobic, hypocritical rag' Charlie Hebdo at freedom of speech rally
iJobs Money & Business
£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...
£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...
£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...