BG Group Holds "Productive" Talks With Australia Government On Mining Tax

15th Jun 2010 05:59

CANBERRA (Dow Jones)--BG Group PLC (BG.LN) met with Australian Prime Minister Kevin Rudd Tuesday to discuss the potential impact of a new 40% tax on resource industry "super profits" on the emerging coal-seam gas sector. It comes as the BG Group board is preparing to make a final investment decision on its Queensland Curtis liquefied natural gas project later this year. Analysts consider BG to be the front runner among four rival projects vying to turn coal seam gas into liquefied natural gas for export at Gladstone port in Queensland state. BG has already found a Japanese customer and a Chinese customer for LNG from two production units, although the project is still awaiting federal and state government environmental approvals. "The prime minister and I discussed the Queensland Curtis LNG project which is being developed under the existing Queensland royalty regime, but which may be subject to a federal resource profits tax," Catherine Tanna, head of BG Group's Australian operations, said in a statement. The meeting was "productive", Tanna said, without providing further details. Rudd's center-left Labor government first outlined the planned tax, aimed at securing a greater share of profits from the nation's vast mineral resources, in early May. Under the planned tax, which would effectively replace state-based mining royalties, profits over the long-term bond rate would be taxed at 40%. Mining companies have railed against the tax in an increasingly vocal, and bitter, public campaign, with some mining companies putting projects and investments on hold and executives of some other companies threatening to focus investment in lower taxing countries and describing the levy as a potential sovereign risk. On Friday, local media reports suggested Rudd could seek to exempt coal seam gas projects from the new tax--switching them instead to an existing tax regime that applies to offshore oil and gas projects--in a bid to split industry opposition by quarantining them from the most vocal opponents of the tax, which include BHP Billiton Ltd. (BHP) and Rio Tinto Ltd. (RTP). The existing petroleum resource rent tax kicks in at a higher profit hurdle than the proposed resource super profits tax. -By Rachel Pannett, Dow Jones Newswires; 61-2-6208-0901; [email protected] (END) Dow Jones Newswires June 15, 2010 00:59 ET (04:59 GMT)