ANOTHER major mine development is in doubt over the super-profits tax, turning boom to gloom in the outback Queensland town of Cloncurry.
The Australian understands that Perth-based FMR Investments put on hold last week plans to reopen the Eloise copper mine near Cloncurry, 1800km northwest of Brisbane, where the community is reeling from Xstrata group's move to mothball the $600 million expansion of its Ernest Henry mine.
Sources close to FMR said the company's board shelved plans to bring back the Eloise mine and mill after crunching the numbers on the proposed 40 per cent tax.
Reopening the copper mine, taken offline in November 2008 because of a slump in the commodity price, would have generated more than 150 jobs locally.
Cancellation of the project would be a bitter blow for Cloncurry's 2300 residents as they confront layoffs by contractors who had been gearing up for the Ernest Henry redevelopment, and the loss of permanent jobs at the expanded copper mine.
Mayor Andrew Daniels has warned that 60 contracting jobs have already gone, though the government disputes this.
Another 190 would be lost if the Ernest Henry expansion did not proceed, Mr Daniels told The Australian.
FMR's plans to resume production at Eloise were so far advanced that staff had been put on the ground.
But it is understood the company's modelling showed the resource super-profits tax would punch such a hole in returns that the project was unviable.
Calls to FMR's Perth headquarters were not returned.
Anglo-Swiss Xstrata was adamant yesterday it was not bluffing and would scrap its investment in Ernest Henry as well as a new coal mine at Wandoan, in the Surat basin, 410km northwest of Brisbane, if the RSPT went ahead in its current form.
The Rudd government has accused Xstrata of running a fear campaign, saying the 3000 jobs reportedly at risk did not yet exist.
But Xstrata Coal chief executive Peter Freyberg said the company was deadly serious, even though it had spent $200m on the Wandoan project and was about to commit a further $186m.
"When you have a project that indicates there is no value in it, obviously you can't keep spending shareholder money at that rate," he told Sky TV yesterday.
Queensland Treasurer Andrew Fraser renewed his call for Canberra to lift the point at which the new mining tax would cut in from profits of about 6 per cent to 11 per cent, in line with the resource rent tax on petroleum production.
Mr Fraser said yesterday Queensland believed there was "room to move" on the threshold.
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