Australia's Government Committed to Mining Tax, Swan Says
BHP, Rio Tinto Set to Pay Mining Tax
Christian Sprogoe/Rio Tinto Group via Bloomberg
Rio Tinto and other iron ore and coal producers will pay A$10.5 billion ($9.6 billion) more in tax in the first two years of the 30 percent levy proposed by Gillard.
Rio Tinto and other iron ore and coal producers will pay A$10.5 billion ($9.6 billion) more in tax in the first two years of the 30 percent levy proposed by Gillard. Photographer: Christian Sprogoe/Rio Tinto Group via Bloomberg
BHP Billiton Ltd. and Rio Tinto Group are set to pay higher taxes in Australia after Julia Gillard’s Labor party today won support to form a minority government, following the closest election in 70 years.
Prime Minister Gillard clinched a deal with two independent lawmakers Rob Oakeshott and Tony Windsor, paving the way for her to form a government. The Australian dollar extended losses as it became clear she would retain power.
BHP, Rio and rival iron ore and coal producers will pay A$10.5 billion ($9.6 billion) more in tax in the first two years of the 30 percent levy proposed by Gillard, 48. Oakeshott today said he wants an “open public discussion” on the mining levy as part of a broader debate on tax reform.
“At this stage, it only includes coal and iron ore but who knows if the scope changes or the rates change,” Peter Chilton, a fund manager at Constellation Capital Management Ltd., who holds shares in both BHP and Rio, said by phone from Sydney. The issue of a possible increase to the tax rate casts “a bit more doubt” on the mining sector, he said.
BHP dropped 0.3 percent to A$38.44 at 4:10 p.m. Sydney time close on the Australian stock exchange. Rio declined 0.9 percent to A$74.35.
Tony Abbott, 52, leader of the Liberal-National coalition, had pledged to scrap the tax. Opposition to the tax in the nation’s mining states wasn’t enough to topple Gillard, who wants the money to fund tax breaks for small businesses and roads, rail links and ports.
“Let’s have a meaty debate about tax reform in this country,” Oakeshott said. “That dialogue is important so we can then make some substantial decisions on what is one of the core issues for this country.”
To contact the reporters on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net
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