Mining and Heavy Industries

Canavan roasts WA iron ore tax proposal

A proposal to massively increase the iron ore royalties tax on WA’s two biggest miners has been slammed by federal resources minister Matt Canavan.

Canavan, responding this week to a proposal by new WA Nationals leader Brendon Grylls, said increasing the royalty tax Rio Tinto and BHP Billiton pay on iron ore extracted from the ground from 25c to $5 per tonne, would cost Australia investment and jobs.

“I have some grave concerns that the proposal damages our reputation as a stable destination for attracting investment and jobs,” Canavan was quoted in a number of sources this week.

“You need to curry favour over a long period of time with investors,” he explained.

“Nasty surprises are not a good idea.

“This is considered a nasty surprise for the industry and it’s something we have to be concerned about.”

The tax, proposed by Grylls shortly after he was elected as WA Nationals leader in August, would only apply to BHP Billiton and Rio Tinto.

But even Andrew Forrest, whose Fortescue Metals Group would be immune to the tax thanks to its more modern agreement, has objected to the idea.

A spokesman for Forrest reportedly told Fairfax the mining magnate had contacted Grylls and outgoing WA Nationals leader Terry Rodman, prior to the election, to discourage the party from progressing the idea any further.

Forrest reportedly told the pair the mining tax would be a “unilateral variation” of state agreements, which would set a “bad precedent”.

“Mr Forrest says it would be unfair to discriminate against individual companies in this way,” the spokesperson reportedly said.

Grylls formally announced the policy proposal as his major platform after his election.

“The state agreements have afforded enormous benefits to Rio Tinto and BHP Billiton, however they are now out of date and do not reflect modern practices including Singapore trading hubs, contracting, fly-in-fly-out workforces and automation,” he said.

“It is unfair that this production rental that has existed in the original state agreement has never been changed since it was created in the 1960s.”

Grylls says the miners’ profits have been “facilitated” by WA, and now it is time for those miners to help the state deal with its finances.

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