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Australian mine tax uncertainty to last into 2011

by reuters | Thomson Reuters Foundation
Thursday, 9 September 2010 08:15 GMT

* Greens allay concerns over mine tax

* Greens say uranium, banks not included in tax regime

* PM Gillard to test numbers in parliament on Sept. 28

By James Grubel

CANBERRA, Sept 9 (Reuters) - Uncertainty over the shape of Australia's controversial mining tax is likely to last well into 2011 after national elections which returned the country's first minority government since World War Two.

The 30 percent tax on big iron ore and coal mines is the centrepiece of Prime Minister Julia Gillard's second-term agenda, but could face changes from three independents and one Green lawmaker, whose support she needs to remain in power.

The ruling Labor Party said on Thursday the new parliament would meet on Sept. 28, when Gillard will test government numbers in the lower house for the first time since the Aug. 21 election.

But parliament will sit for only four and a half weeks before adjourning until February 2011, leaving little time for major policy development this year.

Greens leader Senator Bob Brown told Reuters in an interview that while his party would like a 40 percent mine tax as originally proposed by Labor, it can not force such a major change and would back Labor's current resource tax.

"I've made it clear, even through the election campaign, that we don't have the (parliamentary) numbers, and that we would accept the lesser tax that the Gillard government has agreed to," Brown said.

Shares in Australian uranium miners, the world's second largest producers, have lagged the wider market since the election on worry the Greens may hamper mining or try to include uranium in the new tax, but Brown rejected investor concerns.

"We advocated that, but no it won't be included. The prime minister has made that clear. The government and the opposition will oppose that. So it won't happen," said Brown. [ID:nSGE68809Y] <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For full Australian election cover [nAUVOTE] Australia political risks: http://r.reuters.com/gan92n

For an election graphic: http://link.reuters.com/cyq79n ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

The Greens have signed an agreement to support Gillard's government, but the agreement makes no mention of the mining tax. Brown said his party would push for amendments, but clearly did not have the numbers to enforce any major changes.

URANIUM INVESTOR CONCERNS

Australia, the second largest uranium producer behind Canada, has the world's largest uranium reserves and exports are forecast to grow to meet rising international demand for nuclear power as countries seek to cut carbon emissions.

The Greens have long opposed uranium mining, nuclear power and nuclear weapons. The ruling Labor Party in 2007 abolished its long-held opposition to new uranium mines, although approval for new projects rests with state-based governments.

Australia's Uranium Association, which represents producers such as ERA, controlled by global miner Rio Tinto <RIO.AX> <RIO.L>, and BHP Billiton <BHP.AX> <BLT.L>, said it was concerned the new government and Greens might look to widen the mining tax to uranium projects. [ID:nSGE6870M3]

"We would expect the preceding status quo will hold," said association spokesman Simon Clarke.

"But we would certainly think that it's possible that a passionately held policy of the Greens, like opposition to uranium mining, is one that they might want to push into their agreement with Labor."

MINE TAX LAWS IN 2011

Laws for the new tax are unlikely to be ready before February 2011, and only after a committee headed by former BHP Billiton chairman Don Argus consults mining companies on details of how the tax will work.

The Argus committee was due to report by the end of the year, but its work was interrupted by the elections. Treasurer Wayne Swan said on Wednesday he expected the detailed legislation would be six months away.

The terms of reference for the Argus committee include negotiations on the taxing point and valuation of the commodity, and definitions about projects and eligible expenditure.

The Argus committee will also work out a way of determining which projects are exempt from the tax due to profits of less than A$50 million ($46 million) and how the new tax will work to credit payments of state-based mining royalties. ($1=A$1.09) (Additional reporting by Rob Taylor in Canberra, Mark Bendeich and Bruce Hextall in Sydney; Editing by Michael Perry)

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