Australia's New PM Victory Changes Little On Resource Tax -Miner

The removal of Kevin Rudd as Australia's prime minister is unlikely to change the prospects for the government's mining tax, one of the more vocal critics of the plan said Thursday.

Tony Sage, chief executive of Cape Lambert Resources Ltd. (CFE.AU), said that Labor's new leadership team of Prime Minister Julia Gillard and Deputy Prime Minister Wayne Swan were wedded to the tax.

"Wayne Swan is the architect of this tax and he has been virulently opposed to any compromise, so it would be a big back-down for him personally. Gillard is from the left and was never a favorite of the mining industry," he said.

A mining analyst at an international bank in Sydney added that the tax was too important to the government's plans to close its budget deficit by 2012-2013 to be lightly sacrificed.

"You'd have to be extremely brave to assume it wouldn't continue in some form," he said, speaking anonymously because his views didn't represent those of the bank.

In its budget papers released last month, the government estimated it would raise A$3 billion from the tax in 2012-2013 and A$9 billion the following year.

Opposition to the proposed Resource Super Profits Tax, announced in May, has mounted over the past two months as Rudd's approval ratings have slipped. Mining companies claim that the tax will cause foreign investment in new and existing projects to be choked off because of the expectation of lower returns.

Cape Lambert, Fortescue Metals Group Ltd. (FMG.AU) and Xstrata PLC (XTA.LN) have all put projects on hold, and BHP Billiton Ltd. (BHP) and Rio Tinto Ltd. (RTP) have also said that some projects would be under review.

The Minerals Council, a mining lobby group, has spent A$100 million on an advertising campaign against the tax plans, while mining executives have shown little interest in compromise.

That attitude would be emboldened after the removal of Australia's prime minister, Sage said.

"If they try to tinker at the edges (of the tax plan) the mining industry realises it's now got a bit of support out there in the public, so it will be less inclined to give ground," he said.

That would be particularly the case with the issue of retrospectivity--whether the tax would apply to profits from existing projects as well as new developments, Sage added.

 
   -By David Fickling, Dow Jones Newswires; [phone]; [e-mail]