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Canberra - Australian Prime Minister Kevin Rudd on Friday denied talk of a swift deal with miners over his controversial mining tax, as global miner BHP Billiton rejected a rumoured compromise affecting the nation's top export sector.
More than $20bn of new resource investment in Australia has already been put on hold by global miners due to the tax, set to start in 2012, and Rudd is losing voter support over the tax ahead of elections expected in October.
"I think we have got weeks and probably months of consultations yet with the major mining companies," Rudd told local TV, responding to media reports a compromise was close.
Shares in BHP Billiton, Fortescue Metals Group, Rio Tinto Ltd and Xstrata all rose in London and Australia on hopes for a deal.
There is widespread speculation Canberra will water down its planned 40% mine profits tax by remodelling it along the lines of an existing tax on the offshore oil-and-gas industry.
BHP Billiton chairperson Jac Nasser rejected such a move.
"As I write, there is speculation that the [Petroleum Resource Rent Tax] is a solution. It isn't," he said in a letter to shareholders released to the Australian stock market.
BHP CEO Marius Kloppers, who held talks with Rudd this week, told a Sydney newspaper he could see no end to the dispute over the "super profits" tax.
"I'm always hopeful that sense prevails. I have not seen a path this time how sense is going to prevail as of yet, but I remain hopeful," Kloppers said.
The government defends the tax, saying it will not stall investment, as miners claim, and it will give Australian workers a fairer share of returns in the booming resources sector.
UBS Economics said the government and miners had time to reach a compromise before the tax would impact on investment.
UBS surveyed almost 200 mining and non-mining projects and found there were enough projects under construction or committed to, that investment would keep rising for a year or more.
"Without a flow of new projects being committed to, weakness or a hole in the capex cycle would arrive mid to late 2011," said UBS chief economist Scott Haslem.
"So we have a bit of time to achieve resolution and regain clarity in the mining investment landscape."
Greens crucial to tax
With falling voter support, pressure is on Rudd to reach an agreement with miners so the government can focus on bread and butter issues, like health, in the lead up to the election.
Melbourne's Herald-Sun newspaper said the government could announce changes within days, and might lift the threshold where the tax kicks in from about 6% to above 10%, and could scrap the 40% underwriting of losses in return.
The paper said the changes would go some way to meeting the general objections of the mining industry, and would be aimed at helping coal seam gas projects in the key battlefield state of Queensland, just months before general elections.
Any deal would be put to parliament in 2011 and after elections later this year, in which the Greens are likely to hold the balance of power in the upper house senate.
Greens leader Bob Brown opposes increasing the threshold above the current 6%, but said he would support an end to plans to underwrite 40% of mining project losses.
"Australia's resources belong to all Australians and mining royalty returns have not kept pace with the enormous profit companies have made during the resource boom," Brown said.
"We are seeing a contest between plutocracy and democracy - the power of billionaires versus the rights of 22 million other Australians. The Greens support a resource rent tax and urge the prime minister and cabinet to do the same," he said.
- Reuters
