PERTH (miningweekly.com) – The Western Australian Chamber of Minerals and Energy (CME) has warned that the commercial start of the $19.7-billion Eliezer Batista S11D iron-ore mine, in Brazil, is a reality check for Australian politicians looking to use the sector as a “bottomless cash cow”.

CME CEO Reg Howard-Smith said on Tuesday that commercial operations at the world’s largest iron-ore mine were expected to start this month, with mining giant Vale taking advantage of Brazil’s lower-cost taxation and royalty regime.

The Brazilian major inaugurated the new iron-ore project in December, with the mine ramping up to 90-million tonnes a year by 2020. Once the ramp-up is completed, about 2 700 employees will be working directly at the plant and mine and, at least, 10 000 indirect jobs will have been created.

“At the same time as the world’s largest mine creating thousands of jobs is getting under way, Brendon Grylls and the Western Australian Nationals are proposing a new iron-ore mining tax, which will make us even more uncompetitive on the world stage against our major competitor Brazil, destroy 3 400 Western Australian jobs and kill off investment,” Howard-Smith said.

Grylls has proposed imposing a A$5/t iron-ore production levy on BHP Billiton and Rio Tinto, to replace the current 25c/t payment.

“Australia is currently the second-highest taxing jurisdiction for iron-ore, but the Western Australian Nationals’ new tax would make us the most expensive jurisdiction in the world. Royalties here are currently four times higher than our biggest competitor, Brazil. They would become the equivalent of seven times higher with the Western Australian Nationals’ new tax,” Howard-Smith said.

He noted that significant decision-makers from Japan and China have indicated concern over the Grylls mining tax and added that the Brazilian project was a “very real reminder” that Australia is not the only player in the iron-ore market. 

“At least one of the miners directly targeted by the Grylls tax has placed a question mark over further mine investment in Western Australia due to the high costs that will be in place as a result of the Grylls tax.”

“The repercussions of this tax are real. We must remain competitive on the world stage otherwise we lose jobs and investment.

“For Brendon Grylls and the Western Australian Nationals to ignore this reality and the damage their new tax will wreak is irresponsible and a huge threat to Western Australia’s future.”