Australia Mine Tax Outcome Critical To Investor Confidence -Industry

Global mining companies' confidence in Australia will depend on the work of a government panel tasked with refining a controversial mining tax plan, according to the country's peak mining lobby Friday.

The government has a "small policy window" to prevent investor views of the country's mining regime deteriorating, the Minerals Council of Australia said in a submission to a policy group overseeing the implementation of the tax.

"A lot of work needs to be done in a relatively short space of time to turn around negative perceptions and to reinforce investor confidence in Australia as a premier destination for minerals production and investment."

The council warned that competition from Brazil, Canada, India, Africa, Indonesia, Mongolia, Russia, Colombia, and South Africa could threaten Australia's dominance of iron ore and coal, the two commodities affected by the government's planned Minerals Resource Rent Tax.

The government's Policy Transition Group, composed largely of former and current mining and energy executives, is meeting over the next two months to refine the final form of the tax.

The Minerals Council stridently opposed a previous version of the tax, the Resource Super-Profits Tax. Prime Minister Julia Gillard revised the tax as the MRRT within a week of arriving in office in late June, after consultations with BHP Billiton Ltd. (BHP), Rio Tinto PLC (RTP) and Xstrata PLC (XTA.LN), cutting the tax rate to an effective 22.5% and removing it from all commodities but coal and iron ore.

In its submission, the Minerals Council highlighted its support for the current version of the tax, describing the change as "a positive step and an opportunity to draw a line under the uncertainty created by the RSPT."

"If the industry is to have confidence in the work of the Policy Transition Group and in the future stability of Australia's resource taxation regime, this commitment must be iron-clad," it said.

-By David Fickling, Dow Jones Newswires; +61 2 8272 4689; david.fickling@dowjones.com

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