PERTH (miningweekly.com) – Diversified miners BHP Billiton, Rio Tinto and Xstrata met with the Australian government on Wednesday to express their concerns over the proposed super profits tax (SPT), but were not happy with the outcome of the discussions.

Three fundamental areas of concern were outlined, including the need for an effective tax rate that retained Australia’s international competitiveness, stability arrangements for taxes and royalties for existing and new projects, and ensuring that the SPT was not applied retrospectively, so existing projects where investment decisions have already been made, were not affected.

“At present, there is no formal acknowledgement from government that these key issues will be addressed,” the companies said in a joint statement after the meeting.

Rio Tinto repeated on Wednesday that it has "grave concerns" about the implications of the tax proposal.

In a letter to shareholders, company chairperson Jan du Plessis said that the SPT had been developed in a vacuum and was divorced from the day-to-day realities of business.

“Your board has serious concerns about the impact of this proposed new tax, not only for Rio Tinto and the mining industry, but indeed for the whole of Australia’s future economic prosperity,” Du Plessis said.

“We are particularly concerned by the application of the tax to existing projects. The mining industry invests billions of dollars a year in new projects and most of these projects take years, even decades to pay back that investment.

“Companies like Rio Tinto are naturally only prepared to make such major long-term commitments in stable legal, tax and regulatory environments.”

Du Plessis noted that the government’s current proposal, arrived at without consultation, has now “significantly destabilised” the investment framework.

“As a result, there has been a considerable increase in the perceived risk of investing in Australia, threatening to make Australia a much less attractive place in which to invest.”

Under the proposed tax, the mining industry would be taxed at a rate close to 57%, which meant that Australia would have the highest taxed mining industry in the world, Du Plessis said. This would further reduce Australia’s attractiveness for investors, he added.

“Rio Tinto has sought a genuine consultation process with the government on the proposed super tax and has assured it that we remain willing and able to engage in constructive discussions.”

Both Rio and BHP were currently reviewing their Australian projects under the proposed SPT while Xstrata has already suspended A$586-million worth of development expenditure.

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