Super tax puts Australian jobs at risk, miner claims
Pressure is growing for Kevin Rudd, Australia's prime minister, to abandon his proposed mining super tax after one of the country's largest miners said it puts tens of thousands of jobs in jeopardy.
By Garry White, Commodities
Published: 5:40PM BST 19 May 2010
Concerns were further heightened after a US bidder walked away from an A$3.8bn (2.2bn) acquisition of a major Australian coal group.
Andrew Forrest, chief executive of Fortescue Metals Group (FMG), said $15bn of iron-ore expansion plans are now on hold because of the "devastating" effect of the taxation plans. The head of Australia's third-largest iron-ore miner said that the proposals would mean the company would not be able to generate the cashflow needed to make the investments it had previously planned.
Mr Forrest predicted 30,000 future construction and mining jobs were now at risk because these projects were on hold. He added that the decision raised the prospect of Australian assets being sold to China because the country had the funds to develop prospects Australian miners were now unable to fund.
The statement prompted Colin Barnett, Western Australia's state premier, to say that the new tax would hurt the Australian economy. Western Australia contains the iron-ore rich Pilbara region, where Rio Tinto and BHP Billiton mine a significant amount of the world's supply of the mineral.
"I think it's of great concern that every day we are seeing announcements like FMG today saying that future projects are basically on hold," Mr Barnett said. "It's symptomatic of a serious problem for the Australian economy."
Shares in MacArthur Coal fell 15pc in Australia on Wednesday after its board rejected a reduced A$3.8bn (2.2bn) bid from US coal giant Peabody Energy as too low.
After Mr Rudd proposed the 40pc mining super tax, Peabody cut its offer for the group to A$15 a share from A$16. Peabody said that it would now look elsewhere for investment opportunities.
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