CANBERRA, Australia, March 24 (UPI) -- In what is seen as a victory for mining giants, the Australian government has agreed to concessions on its proposed resource tax, including crediting miners for "current and future royalties" charged by state governments.
The government accepted all 98 recommendations put forth by a policy review group led by Don Argus, former chairman of BHP Billiton.
"The government supports the recommendation that all current and future royalties be credited and that all levels of government should ensure (that) the taxation of Australia's resources preserves our international competitiveness," Australia's Minister for Energy and Resources Martin Ferguson said Thursday in a statement.
The issue of royalties had been an obstacle to agreement on the Mineral Resource Rent Tax.
First proposed by former Prime Minister Kevin Rudd last May as a "super-profits" resources tax, the MRRT called for a 40 percent tax on profits across Australia's mining industry. But Rudd's proposal faced fierce opposition from mining giants such as Rio Tinto and BHP Billiton.
A compromise was agreed upon in July with Rudd's successor, Julia Gillard, reducing the rate to 30 percent and restricting it to coal and iron ore miners. Australia is the world's largest exporter of coal and iron ore.
In October the Gillard administration said it wouldn't credit future royalty hikes, even though the agreement said all royalties would be covered.
Ferguson said Thursday a group made up of industry representatives and government officials would be established to continue the consultation process for drafting the MRRT legislation, which is to be introduced to Parliament by the end of the year.
Scott Grimley, mining leader at Ernst and Young, said the likely structure of the tax "strikes a reasonable balance between government's objectives and industry's objectives," the Financial Times reports.
Small-scale miners, with an annual profit of less than $50 million, would be exempt from the MRRT, which is expected to raise $7.5 billion in its first two years and is to apply from July 2012.
The Association of Mining and Exploration Companies, representing mid-tier and emerging miners, said that it was "extremely disappointed" that the concerns of its members hadn't been considered by the federal government.
"There are significant 'points of difference' between emerging mining companies and the large multinational, multi-commodity conglomerates that 'negotiated' the MRRT framework with the Gillard government," the group's Chief Executive Officer Simon Bennison said in a statement Thursday.
