2nd UPDATE: Fortescue Claims Australia's Ex-PM Rudd Was Close To Resource Tax Compromise

29th Jun 2010 11:42

(Adds comments from Treasurer's office, Fortescue spokesman) By Ross Kelly Of DOW JONES NEWSWIRES SYDNEY (Dow Jones)--Fortescue Metals Group Ltd. (FMG.AU) dropped a bombshell Tuesday, claiming former Australian Prime Minister Kevin Rudd was close to striking a compromise deal with miners over its proposed resource "super profits" tax that included some generous concessions to the industry. Rudd was ousted by his own party on Thursday and replaced as prime minister by Julia Gillard after a slide in his popularity caused by a decision to shelve a carbon emissions trading scheme was augmented by his apparent failure to strike a deal with Australia's powerful mining industry over the tax's key components. However, Fortescue, Australia's third biggest iron ore miner behind BHP Billiton Ltd. (BHP.AU) and Rio Tinto Ltd. (RIO.AU), said in a statement that it was its expectation that Rudd was about to release a revised position on the tax as a discussion paper to the mining industry before his departure on Thursday. Key aspects of the revised position included increasing the rate at which the tax kicks in to 15% from the long-term bond rate of around 6% and removal of the 40% government guarantee. "It would be a great shame if the finalized outcome of any negotiations between the Gillard government and the mining industry were anything less than what was achieved while Mr Rudd was PM, otherwise his departure will be recognized as futile," Fortescue Chief Executive Andrew Forrest said in the statement. The Prime Minister's office declined to comment on Fortescue's claims and the office of Australian Treasurer and Deputy Prime Minister Wayne Swan said: "The government has already said that we do not intend to conduct these discussions through the media". Earlier Tuesday Gillard said she is confident renewed goodwill between the government and the mining industry will help resolve their dispute over the tax, stressing that "genuine negotiations are underway" that have her "personal attention and focus". Rudd's office was disbanded Tuesday and the former prime minister couldn't be reached for comment. He departed the official prime minister's residence in Canberra Tuesday evening for his home state of Queensland, where he is planning a family holiday. BHP Billiton and Rio Tinto declined to comment on Fortescue's claims. Forrest has been an outspoken critic of the proposed tax, previously declaring it "dead and buried". Forrest said Tuesday that this view was "reinforced" by his discussions with Rudd and his office. If Fortescue's claims are to be believed, they will increase pressure on Gillard to consider the suggested amendments, given her offer of open door negotiations with miners. Other aspects of the revised position included: reducing the impact of the tax's application to existing projects; an immediate write-off for new capital; and shifting the taxing point for projects to the point of mineral extraction, Fortescue said. A Fortescue spokesman said the company hasn't yet met with Gillard's office or had any meeting arranged. The Treasurer's spokesman, meanwhile, said negotiations with the mining industry flagged by Gillard "are taking place over the course of this week". -By Ross Kelly, Dow Jones Newswires; 61-2-8272-4692; [email protected] (Rachel Pannett in Canberra and David Fickling in Sydney contributed to this story) (END) Dow Jones Newswires June 29, 2010 06:42 ET (10:42 GMT)