INTERVIEW: Atlas Iron Says Proposed Tax Won't Benefit Whole Industry

2nd Jul 2010 05:52

By Stephen Bell Special to DOW JONES NEWSWIRES PERTH (Dow Jones)--Atlas Iron Ltd. (AGO.AU) said Friday that the Australian government is "naive" if it believes a tax deal hammered out this week with some of the world's largest miners is a good result for the whole industry, including small iron ore companies like Atlas. "These guys (BHP Billiton Ltd. and Rio Tinto Ltd.) have never wanted us to be in the Pilbara in the iron ore business - they see us as competitors," Atlas Managing Director David Flanagan told Dow Jones Newswires. "So it is kind of naive of the government to think that these guys are going to act in the best interests of all companies in Australia," he said in an interview. The Pilbara region in the north of Western Australia state is known for its mineral resources, especially iron ore. Flanagan plans to attend a special meeting of the Association of Exploration and Mining Companies, or AMEC, later Friday, called to discuss the proposed Minerals Resource Rent Tax, which has been welcomed by big miners, including BHP Billiton, Rio Tinto and Xstrata PLC (XTA.LN), as an improvement on the discarded Resource Super Profits Tax. AMEC, of which Atlas is a member, last week agreed to stop running its anti-mining tax advertisements on the basis that the Australian government would negotiate on the modifications and achieve an industry consensus, Flanagan said. "But AMEC has been shut out of these negotiations - that's a bit rude," he said. AMEC, which represents small and mid-cap mining companies, plans to issue a formal statement Friday outlining its objections to the deal, Flanagan said. The extra tax burden will make it more difficult for smaller miners to raise finance for new projects, he said. "It is going to make it that much harder for those companies to climb into the ranks of the majors, because of the reduced access to capital," he said. Paying more tax means smaller companies will have less money to reinvest, and "because we don't have the same options as the majors to get that money from somewhere else, that is where you are hit." The tax, as proposed, "provides a benefit to those companies that have a relatively unlimited list of (funding) options," such as the diversified majors, he said. -By Stephen Bell, contributing to Dow Jones Newswires; 61-8-9244-4243; [email protected] (END) Dow Jones Newswires July 02, 2010 00:52 ET (04:52 GMT)