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Mining tax threatens SA expansion.



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Rowan Ramsey, MP  Federal Member for Grey 

MINING TAX THREATENS SA EXPANSION

Tuesday, May 11, 2010

Kevin Rudd’s plan to slap a 40 percent tax on mining profits threatens to derail the much-anticipated expansion of the mining industry in South Australia, Member for Grey Rowan Ramsey said today. “SA has long been the Cinderella State when it comes to mining,” he said. “Now just when it seems we were to start utilising our resources, the Federal Government is intent on making every marginal mining operation non viable. “You can’t just strip away profits and expect that all of the sums will still add up the same. Many of the new projects have high mining and transport costs, some because the ore is deep, because it is hundreds of kilometres from ports and or because port and transport facilities have not been developed. “Every impediment you put in the way of a development goes on top of the foundations laid before and makes the go-ahead that much harder. “This tax will push every project that much closer to the point where it is not worth the investment risk. “Just last week Premier Mike Rann was again trumpeting the expansion of the industry when he announced the

establishment of an ‘Infrastructure Demand Study” (another inquiry) and claiming Port Augusta, Whyalla and Port Pirie stood to benefit. “Every new project will now be seen through the filter of a new tax. BHP’s chief Marius Kloppers said it would be

very difficult to approve the $20bn plus Roxby expansion under this tax. Failure to do so would be an enormous blow to our region. “Other projects including large iron deposits on Eyre Peninsula and in the north, coal to gas proposals, uranium prospects, rare earths and copper on Yorke Peninsula will all be reassessed with a new bottom line. “I can’t say whether projects will go ahead or not, even the proponents would not know at this stage, but I do know there will be substantially less.”

Mr Ramsey said South Australia should have been looking to increase its royalty regime. “This tax would mean that door is shut forever”,” he said. “The government proposes to take 40 percent of company profits, after they have already paid payroll taxes, paid wages, superannuation etc, what is left will then be subject to 28 percent company tax, resulting in a combined tax rate of 57 percent. The next highest effective rate in the world is the US at 40 percent, Canada has taxes at 23 percent. “Kevin Foley, after initially welcoming the tax, has now said he will go to Canberra to protest, but considering the State Government’s track record of rolling-over to Kevin Rudd on water, hospitals and the ETS I am doubtful this will achieve anything. “Mr Rudd is desperate to introduce a new tax to meet his ever escalating spending commitments. He tried with an ETS. It’s obvious now he wasn’t committed to that, only the tax, so instead he wants a Resource Tax. It is only about the money and the fact he can’t stop wasting it. “Already we have seen a string of cancellations and deferrals from the mining industry, the latest being Xstrata and Incitec Pivot with Incitec announcing it is suspending its phosphate drilling program in Queensland. “This threatens to increase prices of fertiliser, cement, electricity and road materials.”

Media Contact: Leonie Lloyd-Smith (08) 8633 1744 11 May 2010