Iron ore alliance joins tax debate
The Mid West mining industry is joining the push for changes to the proposed Mineral Resources Rent Tax.
In its formal response to the Don Argus review, the Federal Government said it would implement a phase-in system where miners could profit up to $100 million before the full effect of the tax kicked in.
GIOA chief executive Rob Jefferies said the phase-in system would benefit miners in the short term, but the industry ultimately didn’t support the tax.
“Mines in the region plan to be profiting well beyond $100 million, but I think it’s a good thing that the government has taken these recommendations on board,” he said.
“Another positive is they’ve agreed the point at which the value of the product is taxed is as close as possible to the point of extraction.”
He was disappointed with the decision to include magnetite in the tax. He said it made no sense.
“The tax was designed to give the Federal Government a return from the resources that are extracted out of the ground,” he said.
“The iron ore industry in Australia is mainly direct shipping ore, which has value as it leaves the ground.
“Magnetite has very little intrinsic value because there is a lot that goes into processing the product.”
Mr Jefferies said the point at which the tax kicked in would mean magnetite would be taxed at a lower rate than other minerals, but its inclusion still carried an unnecessary administrative burden.
Iron ore miner Sinosteel Mid West runs the Koolanooka and Blue Hills operations and is developing the Weld Range mine.
Sinosteel Midwest Corporation chief financial officer Brad Farrington said he was also disappointed with the decision to leave magnetite in the tax.
“We have enormous issues with the inclusion of magnetite in the MRRT as this resource has smaller margins and much higher up front capital costs than traditional hematite iron ore,” he said.
“The imposition of the MRRT will have a detrimental impact on projects that would otherwise be significant contributors to the Mid West region’s development.”
Mr Farrington questioned the Federal Government’s motive to introduce the tax, when there was already an effective royalties-based system in place.
“We prefer the current State based royalty system where the revenue raised flows directly back to the State,” he said.
“Why replace a system that is not broken?”
The Federal Government tax is in its final stages in Parliament due to be implemented in July.
CLAIRE TYRRELL
