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Sydney - BHP Billiton [JSE:BIL] believes Australia's proposed 40% tax on the "super profits" of the mining industry could cut the value of its planned joint venture with rival Rio Tinto, a report said on Friday.
The Anglo-Australian mining giants want to combine their iron ore operations in West Australia's Pilbara region in a deal which would see BHP pay Rio $5.8bn to equalise the venture as a 50/50 partnership.
"Clearly the value of what we are buying is impacted by uncertainty," BHP chief executive Marius Kloppers told The Australian.
"In this case, the uncertainty is on my side because I'm buying and the tax impacts potentially the value of what I'm buying - but I'm sure that as we still have some time left, Tom (Albanese, Rio's chief executive) can equally argue that some things happen that work the other way."
Kloppers said the benefits of the merger - which it is estimated will deliver around $10bn in synergies - outweighed questions over the payment.
"Tom and I have spoken about this, and come to the conclusion that this is a deal we should be doing," Kloppers said.
Some Rio shareholders had previously argued for a higher payment from BHP due to the soaring price for iron ore, but that suggestion appears to have faded with the emergence of the proposed new tax, The Australian said.
The BHP-Rio joint venture, which had been due to be finalised by mid-2010, has been delayed as the European Union's competition watchdog investigates the suggested arrangement.
Kloppers said he had no indication of when the European body would make its decision.
"It is my hope that we are getting close to the end of the bulk of the information we are going to submit (to the inquiry)," he said.
The planned 40% "super tax" has drawn a furious response from resource companies, with Rio and BHP Billiton reviewing their Australian operations and other firms suspending projects.
BHP's tax experts are expected to meet the government on the tax on Friday but Rio executives, who met the government on Thursday, described the consultations as too narrow.
- AFP
