Xstrata, the world’s largest exporter of thermal coal, placed all its projects in Australia under review, adding pressure on the government to change its proposed 40 per cent tax on mine profits.

“Until we know where the government is going with this proposed tax, all of our projects are under review,” Brisbane- based spokeswoman Melanie Edgar said today. The Zug, Switzerland-based company has 33 per cent of its assets in Australia, including coal, copper, zinc and nickel mines.

BHP Billiton, the world’s largest mining company, this week joined Rio Tinto Group in putting its projects in Australia under review, saying the tax may stymie investment and spur producers to move offshore. Mining companies and groups are holding talks with the government this week to seek changes.

“It would be imprudent for companies to invest with blinkers on with no regard to, not only this change, but any future change,” said Tim Schroeders who helps manage about $1.2 billion at Pengana Capital. “There’s fair scope for the government to fine tune the detail.”

BHP Billiton fell 1.2 per cent to $38.54 at 1:44 p.m. Sydney time on the Australian stock exchange, while Rio Tinto Group fell 1.4 per cent. Shares of Fortescue Metals Group, Australia’s third-largest iron ore exporter, fell 2.7 per cent.

Canberra meetings

The Minerals Council of Australia, whose members produce more than 85 per cent of the nation’s output, plans to meet Treasury officials this week for talks. Andrew Forrest, who controls Fortescue and is Australia’s richest man, is scheduled to meet the resource tax consultation panel tomorrow in Canberra, said Cameron Morse, a spokesman for the Perth-based company.

“It has become increasingly clear that the severity of the tax on resources sector is greater than we first thought,” Goldman Sachs JBWere Pty analyst Hamish Tadgell said in a report yesterday. “Our feeling is the government is more likely than not to make concessions on certain issues through the consultation process and that the impact of the tax could be watered down in some areas.”

The government was committed to consultation with the mining industry, Treasurer Wayne Swan said this week. Swan said said on May 2 he plans to introduce the tax starting 2012 and raise an estimated $14 billion in the first two years.

Xstrata, the fourth-largest copper producer, yesterday suspended its North Queensland regional exploration program for the metal. Xstrata plans to spend $US14 billion worldwide to boost its output 50 per cent by 2014.

`Across the board’

“For Xstrata, it’s across the board,” Edgar said. “The Xstrata Copper announcement was just the first. We’re reevaluating every other project that’s on the board.”

The company has invested $US45 billion in Australia since 2002, exceeding the $US44 billion in revenue earned in the country, Xstrata Chief Executive Officer Mick Davis wrote in a letter obtained last week by Bloomberg News.

“We expect the mining industry to fight the resource super profits tax aggressively,” Deutsche Bank AG analyst Paul Young said yesterday in a report, adding that “key imputs” will “certainly change” during industry consultation. The tax “will reduce investment in new projects and drive investment offshore,” he said.

Swan’s proposal will make Australia the highest taxed mining industry in the world, the minerals council said after the tax was announced. The resources sector accounts for 9 per cent of the national economy.

“We are happy to consult but tax rates and design have to be on the table,” council spokesman Ben Mitchell said today by phone. The meeting will be held in the Canberra May 13, he said.

BHP said today its Yeelirrie uranium project n Western Australia is under review. BHP has said it aims to begin production at Yeelirrie, the country’s second-largest undeveloped deposit of the nuclear fuel, by 2014.

Posted by Shayne Heffernan on May 11th, 2010and filed underAsia, Equities, Latest News, Markets.You can follow any responses to this entry through theRSS 2.0You can leave a response by filling following comment form or trackback to this entry from your site