phosphate likely to be excluded from tax

Looks like MAK could come out a winner in the new tax regime.

here is the good bit for MAK

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Other concessions are likely to include exempting certain commodities - such as phosphate and possibly base metals such as nickel - from the tax
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"JULIA Gillard flew into Canberra last night to sign a breakthrough deal with the mining industry on the resource super-profits tax.
The government has given up significant ground to ensure the Prime Minister can go into an election without facing a $100 million advertising war.

Ms Gillard arrived about 8pm to finalise the talks between the big three miners - BHP Billiton, Rio Tinto and Xstrata - and Wayne Swan and Resources Minister Martin Ferguson, paving the way for an announcement today.

The Australian understands a high-level, in-principle agreement has been reached for a new consultation process on key sticking points, such as the headline rate of the tax, its retrospective treatment of mines and the rate of return at which the tax will apply.

It is understood the name of the tax will be changed.

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.End of sidebar. Return to start of sidebar.
A key sticking point remains on whether consultations on the detail of the concessions will continue beyond the election, expected to be called within weeks.

It is understood the government will also announce a deal today with players in Queensland's burgeoning coal-seam gas industry, which will bring them under a form of the petroleum resource rent tax rather than the RSPT.

The government will make significant concessions to the miners, including cutting the headline 40 per cent rate of the RSPT. The rate at which the tax applies is expected to rise from the long-term bond rate of about 6 per cent to the bond rate plus 7 per cent, a total figure of 13 per cent.

Other concessions are likely to include exempting certain commodities - such as phosphate and possibly base metals such as nickel - from the tax and allowing miners to use the market, or current, value of their existing projects, when calculating the amount of tax they will pay.

This could save big miners billions of dollars and reduce the restrospective impact of the tax on existing projects.

The changes, which will be put to the wider mining industry for consideration, are likely to reduce the $12 billion the government expected the RSPT to raise between now and 2013-14. To ensure the budget bottom line is not affected, promises that were to have been funded by the RSPT will be cut. These could include the exploration rebate for miners, which was forecast to raise $1.1bn, with the $700m-a-year infrastructure fund directed to the resource states also expected to be cut back.

Other promises - such as the cut in the company tax rate from 30 per cent to 28 per cent, and several superannuation changes - are more likely to be delayed rather than scrapped.

Shares in the big miners surged when reports of the breakthrough leaked yesterday afternoon. Rio's shares jumped $1.58 to $65.73 and BHP's shares rose 71c to $37.43. However, both ultimately closed slightly lower.

A senior government source last night said the government was "committed to a speedy outcome" to the dispute.

Kevin Rudd and the Treasurer had refused to budge on the RSPT's 40 per cent headline rate and its treatment of mine valuations, prompting claims from big miners that it was being applied retrospectively.

But Ms Gillard moved immediately to end the row, which had paralysed Mr Rudd's last weeks as prime minister. She called for renewed talks, pulling the government mining advertisements off the air and enticing a similar concession from the miners.

A mining industry source said last night Mr Ferguson and Ms Gillard had led the negotiations in the past three days. "Swan was moping at times, looking like Mr Grumpy," the source said.

Ms Gillard was heavily involved in the talks and flew back to Canberra last night after attending the Queensland funeral of Private Benjamin Chuck, who was killed in Afghanistan last month.

It is understood the talks had resolved to address the miners' concerns that the tax would be retrospective in its application, by agreeing that the miners could inject their existing assets into the revised tax regime at market value. The concession would ease the concerns of Rio and BHP, whose assets include the Pilbara iron ore mines and east coast coal mines.

As reported in The Australian yesterday, the government has also shifted on the previously non-negotiable 40 per cent rate of the new resource tax. The miners have been pushing for a change to the uniform 40 per cent tax rate proposed on profits from all minerals to a "globally competitive" rate on a "commodity by commodity" basis. The compromise may include only the bulk minerals of coal and iron ore, while excluding copper, nickel and uranium. The Australian understands that the government has effectively doubled the trigger point at which the tax kicks in above the current bond yield rate of almost 6 per cent.

Under the deal with the CSG industry, major players will be given a five-year transition period to adopt a form of the PRRT that covers parts of the offshore oil and gas sector.

It is understood CSG projects will not pay a super-profits tax until returns hit the bond rate plus 15 per cent - or close to 21 per cent. Projects will also be able to write off the cost of acquisitions.

Ending the eight-week war with miners will allow the government to attempt to regain political momentum in Western Australia and Queensland.

Opposition resources spokesman Ian Macfarlane predicted a likely outcome from a compromise would be a divided industry.

Greens leader Bob Brown flagged he would not accept a compromise on the RSPT, warning that parliament would have the last word on the tax.