UPDATE 1-Australia government agrees to repay royalties under...

UPDATE 1-Australia government agrees to repay royalties under mine tax
Thu Mar 24, 2011 2:23am GMT
Print | Single Page[-] Text [+] * Miners win concessions in Australian mine tax
* Government to refund any state royalty increases

* Decision likely to head off new mining industry campaign over tax (Adds detail, quotes)

CANBERRA, March 24 (Reuters) - Australia's biggest mining companies won a major concession over a planned new 30 percent profits tax on Thursday, with the government agreeing to refund any future increases in state-based royalty charges.

Treasurer Wayne Swan said the government agreed with all 98 recommendations of a mining tax transitional policy group, headed by Resources Minister Martin Ferguson and former BHP Billiton chairman Don Argus.

"The Government supports the recommendation that all current and future royalties be credited, and that all levels of government should ensure the taxation of Australia's resources preserves our international competitiveness," Swan said.

Swan's announcement could save the big miners hundreds of millions of dollars in future royalty payments in resource states such as Western Australia and Queensland, and silence any new industry campaign against the tax.

Prime Minister Julia Gillard forged a deal on the new tax with the biggest miners BHP Billiton , Rio Tinto and Xstrata before last August's national elections, but the companies had threatened to back out of the agreement over the state royalties issue.

The 30 percent tax on iron ore and coal mines with profits of A$50 million a year or more is due to start in mid 2012, and is expected to affect 320 iron ore and coal miners. The tax is due to raise around A$7.4 billion in its first two years.

Swan said draft laws would be released in coming months, and the government expected the legislation to pass through parliament by the end of 2011.
He said the agreement on the mining tax would deliver certainty, investment and jobs, but he refused to detail how the national government would pressure the states to not lift state mining royalties in future.

"We are not expecting any substantial change in royalties in the near future. But if and when that challenge arises, then of course there will be discussions with the states," Swan said.

Ferguson said the agreement on the mining tax was fair and balanced and long overdue.

"We've got a major resources boom in Australia at the moment. This system of taxation at long last potentially gives us the opportunity to ensure that the whole Australian community benefits from this investment pipeline, and it is huge," Ferguson told reporters. (Reporting by Rob Taylor and James Grubel; Editing by Ed Davies)