UPDATE: Fortescue Claims Australia's Rudd Was Close To Resource Tax Compromise

29th Jun 2010 09:38

By Ross Kelly Of DOW JONES NEWSWIRES SYDNEY (Dow Jones)--Fortescue Metals Group Ltd. (FMG.AU) dropped a bombshell Tuesday, claiming that 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 has apparent failure to strike a deal with Australia's powerful mining industry over the tax's key components. Fortescue, however, 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 finalised 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 wouldn't immediately comment on Fortescue's claims. BHP Billiton Ltd. (BHP.AU) wouldn't verify Fortescue's claims either, saying it would rather not comment. Rio Tinto Ltd. (RIO.AU) wasn't immediately available to comment. 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 by "doubling the value of existing capital recognising a transition to a new tax regime"; an immediate write-off for new capital and shifting the taxing point for projects to the point of mineral extraction, Fortescue said. -By Ross Kelly, Dow Jones Newswires; 61-2-8272-4692; [email protected] (END) Dow Jones Newswires June 29, 2010 04:38 ET (08:38 GMT)