THE casualty toll from the federal government’s planned resources rent tax continues to rise, with a growing number of local miners indicating plans to mothball planned Australian spending.
THE casualty toll from the federal government’s planned resources rent tax continues to rise, with a growing number of local miners indicating plans to mothball planned Australian spending.
Tony Sage-led Cape Lambert Resources was the first company to formally confirm it had cancelled all planned exploration at its main Pilbara iron ore project because of the proposed tax in favour of focusing on its offshore investment opportunities.
The company, which sold its flagship Cape Lambert magnetite project to China Metallirgical for $400 million in 2007, retains the adjoining Cape Lambert South leases where a significant exploration program had been scheduled for the second half of this year.
“These planned activities will no longer occur given the outcome of the Henry Tax Review, which is looking to impose a retention tax or a ‘super tax’ on mineral projects developed in Australia,” the company said. “The company will now shift its exploration activities to its projects outside of Australia.”
Cape Lambert now appears to view its Marampa iron ore project in Sierra Leone as a better investment prospect than its Pilbara assets.
The decision follows comments by Queensland iron ore billionaire Clive Palmer that he was shelving three unnamed projects, including one in WA, because of the proposed 40 per cent tax on mining profits.
Mr Palmer has refused to name the affected projects, but his Mineralogy group controls billions of tonnes of magnetite near Cape Preston in the Pilbara, as well as extensive exploration licence applications at the bauxite-rich Mitchell Plateau in the Kimberley.
Mr Palmer has ruled out any slowdown at the planned Balmoral South magnetite project owned by listed Mineralogy affiliate Australasian Resources. China’s Citic Pacific is also continuing construction at its Sino Iron magnetite project, which will deliver Mineralogy billions of dollars in royalties over its life.
Meanwhile, the proposed mining tax is also understood to have further complicated Rio Tinto’s review of a mooted $10 billion expansion of its Pilbara operations aimed at boosting capacity by a further 50 per cent to 330 million tonnes by late 2015.
Initially shelved in late 2008, Rio resumed evaluation of the expansion in November. However, it is understood the company expects uncertainty related to the proposed resources tax to continue for months, making the targeted completion date increasingly unrealistic.
The federal government has mounted a concerted face-to-face pitch to placate local industry and provide an opportunity for private feedback.
Resources Minister Martin Ferguson this week held individual meetings with key WA mining leaders, including Rio iron ore boss Sam Walsh, BHP counterpart Ian Ashby and Woodside chief Don Voelte.
The trio was also expected to attend a dinner with Prime Minister Kevin Rudd in Perth on Tuesday evening.
