If the Chinese dont want to invest who will in Australia. No one, devestation on a massive scale. Its comming Kevin Rudds depression the gift he'll give to all australians. Oh dont worry Kevin didnt you sell your shares in Origin and Swans wife sold her BHP shares before you announced the 40% tax. How convenient.
THE chairman of Citic Pacific, the largest Chinese mining investor in Australia, says he is "shocked" by the Rudd government's planned resources tax and is seeking special exemptions for his $US5 billion ($6bn) Pilbara iron ore project.
In an exclusive interview with The Australian while visiting Perth, Chang Zhenming also warned that any future expansion of the massive project -- involving billions of dollars in planned spending -- would hinge on the company achieving a "reasonable outcome" on the tax.
Mr Chang, one of China's most senior businessmen, stressed he believed Australia had been a stable investment destination for many years and his company was familiar with its legal system and society. Citic Pacific's parent company in Beijing, the state-controlled Citic Group, became the first major Chinese investor in Australia in 1986 when it took a stake in the Portland aluminium smelter in Victoria. The group has investments in Australia totalling almost $US7bn.
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But Mr Chang, who was installed last year to run Citic Pacific, said he was concerned the Rudd government now planned to change the tax regime midway through construction of the Sino Iron project, the biggest Chinese investment in the Australian mining industry.
"We are in the construction period, so clearly this came as a shock to us," he said.
Mr Chang said Citic Pacific was seeking recognition from the government that the project -- the first of its kind in Australia -- required massive upfront infrastructure spending and downstream processing to be viable.
Magnetite iron ore differs from traditional hematite ores because it has a lower iron content and must be concentrated to be suitable for steelmaking.
"The reason it's called a super-profit tax is because it's taxed on super profits and we don't believe this mine will have super profits as this is a magnetite project with very low iron concentrate," Mr Chang said through an interpreter.
"So certainly we hope the government will take this type of investment, which involves huge downstream processing and huge investment, into consideration when they actually deal with the super-profits tax.
"There are still a lot of unknowns regarding the super-profits tax and we clearly hope the government can give consideration to differentiating between the magnetite ore and the hematite. We have expressed our views (to the government)."
Mr Chang said Citic Pacific would wait until it had certainty about the tax regime in Australia before deciding on future investments potentially worth billions of dollars. "Once the situation involving the super tax becomes clearer and if we believe that it's a reasonable outcome, then we certainly hope we would make future investments in Australia," he said.
Mr Chang said he believed Chinese investors may be reluctant to invest in Australia if returns are lower under the tax, saying state-owned companies must achieve profits.
