Truce called in mining tax battle

Energy Matters0

BHP Billiton, the world’s largest miner, moved quickly to say it would suspend its advertising on the tax, which was followed by the association of mining an exploration companies also agreeing to pull its ads.

Minerals Council of Australia chief executive Mitch Hooke said the group was also suspending ads in anticipation of being able to discuss all key issues of the tax.

A BHP spokeswoman said the miner was encouraged by the comments of Ms Gillard that her government will open the doors for negotiation with the objective of achieving consensus.

“The industry has consistently been calling for the government to take the time to properly engage on all aspects of the tax, and we welcome the opportunity to do so,” the spokeswoman said.

“In response to the new Prime Minister’s request, we have immediately asked our agencies to suspend all advertising as a sign of good faith.”

Earlier today, in her first speech as prime minister, Ms Gillard said she would “throw open the government door” to the mining sector and in turn, asked the industry to open its mind.

“To reach a consensus we need to do more than consultation, we need to negotiate and end this uncertainty, which is not good for the nation,” she said.

Mining stocks had already jumped early today on the anticipation Ms Gillard would have a softer approach on the tax. Fortescue Metals, Rio Tinto and BHP Billiton were all higher.

Ms Gillard became Prime Minister today after Kevin Rudd stepped aside as leader, following a dramatic slump in opinion polls.

Mine Life analyst Gavin Wendt said the initial reaction of mining stocks was not surprising as all the language from Mr Rudd was that he was anti-mining and was not going to back down from the proposed resources tax.

The value of Australia’s biggest resources companies had crashed $16 billion in the two days following the announcement of the tax on May 2, leading to a robust industry-wide campaign slamming the tax and criticising the government for lack of consultation over the significant changes.

Fortescue chief executive Andrew Forrest said Ms Gillard’s appointment was a reflection of the concern the Australian community had with the tax

“In its existing form, the insidious consequences of the RSPT proposal had the potential to seriously deter the continued growth of the Australian mining industry,” he said.

Mr Forrest said his Pilbara iron ore company would contribute to constructive and open negotiations with the government to achieve a sound outcome that will not penalise the industry.

Atlas Iron managing director David Flanagan, who organised a recent rally in Perth against the tax, said while the industry was willing to negotiate with the new Prime Minister it would maintain its firm opposition to the controversial proposal.

“Julia was part of the team that came up with the idea to ambush the mining companies,” he said.

Mr Flanagan said the tax proposal needed to be dropped and started again, adding the sector would negotiate with the government on that basis.

“Every day this goes on, it is doing no one any good. Our international reputation and ability to borrow money is being damaged.”

Mike Young, managing director of emerging Pilbara miner BC Iron, said earlier today that Ms Gillard needed to distance herself from Mr Rudd’s strategy and start consulting with the sector.

“The industry has always said we are happy to consult on the tax but the lack of consultation really got the sector offside,” he said.

“No one is saying she wasn’t in the gang of four that decided on the tax but the ultimate decision wasn’t hers.”