The Mineral Resource Rent Tax, or MRRT, introduced in July 2012, applies to profits of more than $67 million for iron ore and coal projects. It also allows offsets for state-imposed royalties.
The case was led by miner Andrew Forrest and his Fortescue Metals Group, which holds mining leases for iron ore in Western Australia. Forrest had said the MRRT is unconstitutional because it discriminates among Australian states that use royalty levels to attract investment, the Australian Broadcasting Corp. reports.
Fortescue is Australia's third largest iron ore miner.
"Fortescue challenged the MRRT because it was an unreasonable intrusion into an area of state responsibility and it was also an unfair, discriminatory and complex tax," Fortescue Chief Executive Nev Power said in a statement.
Fortescue's challenge was also supported by the Queensland and Western Australian state governments, The Wall Street Journal reported.
The High Court in its ruling Wednesday said it "held that the treatment of state mining royalties by the MRRT act and the imposition acts didn't discriminate between states."
The original version of the tax, introduced in 2010 by then-Prime Minister Kevin Rudd, proposed a 40 percent tax on mining profits. That enraged the mining lobby, which spent millions of dollars campaigning against the tax, leading in part to Rudd's downfall the same year.
His successor, Julia Gillard, negotiated key terms of the MRRT with the world's biggest miners BHP Billiton, Rio Tinto and Xstrata, reducing the rate to 30 percent and restricting it to coal and iron ore miners.
Rudd returned to office as prime minister last month after Gillard called a ballot for the leadership and deputy leadership of the Labor Party amid persistent leadership tensions.
The conservative opposition has pledged to scrap the tax if it wins federal elections next month.
While the mining tax was expected to generate $3.3 billion in fiscal 2012-13, the government reported in February it had raised just $126 million in the first six months of the tax, due to falling commodity prices and the strength of the local currency.
"History will judge this tax for what it is, and to a measure it's already done that," Mining Weekly Wednesday quoted Forrest as saying.
"We had the multibillion-dollar predictions of how much this tax will raise, and the multibillion-dollar disappointment of how much it didn't. As each year rolls on, it will become more farcical and more obvious to the Australian people that this tax was a pure political fix. It came in under bad governance, and the result was, therefore, predictable," Forrest said.