Miners will have more chances to comment on the proposed mining tax in coming months, even though the government's tax implementation panel still aimed to report by the end of the year, federal resources minister Martin Ferguson said today.
Miners will have more chances to comment on the proposed mining tax in coming months, even though the government's tax implementation panel still aimed to report by the end of the year, federal resources minister Martin Ferguson said today.
Speaking during a break in the panel's meetings with miners in Perth today, Mr Ferguson ruled out any extension to the October 28 deadline by which companies must make their formal submissions on the tax to the panel he co-chairs with Don Argus.
Many smaller companies have indicated they will struggle to meet the deadline given the government only issued its 130 page issues paper on the tax last Friday and had expressed a desire for more time.
Mr Ferguson said the industry itself had urged that the panel should complete its report by Christmas "for the purposes of certainty", and the panel was committed to meeting that deadline.
However, he said industry would still have several opportunities to provide input before the final legislation was drafted by the middle of next year.
"The objective is to finalise our deliberations and give our report to the Treasurer prior to Christmas," Mr Ferguson said. "The report will clearly inform the draft legislation, following which there will be a further process of consultation because it will be an exposure draft which will lead to the final legislation.
"So there will be a couple of opportunities for industry to actually engage with government."
Mr Ferguson said that would still allow the proposed legislation to be enacted by the start of July 2012.
He said talks today had been "straightforward" and said the government's issues paper had "focused the attention of industry and companies" on the key issues.
"I think there's an understanding in the industry now that the government is going to go on with the announcement of the 2nd of July, and perhaps now, they are really focused on the serious issues raised in the discussion paper we released last week," he said.
The planned 30 per cent tax on iron ore and coal profits, and expansion of the current 40 per cent Petroleum Resource Rent Tax on offshore petroleum profits is expected to raise $10.5 billion in its first two years.
Mr Ferguson reiterated that the government's parameters of the tax had been clearly stated, as detailed in the issues paper released last week. The issues paper effectively rules out fundamental changes such as concessions to cover financing costs or making related infrastructure investment deductible.
Both are seen as critical issues for emerging iron ore miners, who argue the tax unfairly targets them over BHP, Rio Tinto and Xstrata, which helped broker the tax and can access cheaper capital.
Magnetite iron miners will also be hoping to have magnetite effectively exempted because it needs extensive processing before it becomes a saleable product, or at the very least, have magnetite taxed before such processing occurs.
The juniors also want the $50 million profit threshold at which the tax kicks in lifted, and potentially doubled.
Mr Ferguson said the $50 million threshold had obviously been raised, "but in terms of our consideration, that's a matter we'll have to discuss in due course with the Treasurer".
He said magnetite miners had also given a very detailed presentation on their concerns, including the taxing point and the value that would flow to Australia from the costly downstream processing of low grade magnetite ores.
"They are all the type of matters that will be considered by the (panel) in due course," he said.
Similarly, the exploration sector's desire for exploration incentives to be included in the tax package had also been raised, he said.
Mr Ferguson sidestepped questions on whether the junior miners had a legitimate claim to see the underlying assumptions on which the tax proposal was based when the compromise tax deal was brokered with the nation's three biggest miners in June.
The government has refused to release the information, claiming it is commercial-in-confidence, because it includes detailed price forecasts and other secret information provided by the three miners.
However, the rest of the industry claims that puts them at a further disadvantage because only the big three can accurately model the impact of the tax on their operations.
Today's meetings focused on the coal and iron ore issues, with dozens of iron ore miners and explorers attending two group sessions this morning.
A number of the bigger companies, including Fortescue Metals Group, Grange Resources, Atlas Iron, Gindalbie Metals, Aquila Resources, and Citic Pacific were scheduled to have individual meetings with the panel this afternoon and tomorrow morning.
Tomorrow's meetings will largely be devoted to meeting with oil and gas companies.
Though offshore producers are generally happy with the PRRT regime, those with onshore projects, which are exempt from PRRT and pay only state royalties, are concerned at the extension of the scheme onshore.
In particular, those with unconventional shale gas or tight gas projects fear the added tax impost may make their projects unviable.
Consequently, the panel will be asked to consider granting unconventional gas the same tax breaks as 'frontier' exploration in deep water, and to classify investment made after production licences have been issued as exploration spending, making it tax deductible.
Commenting on this morning's session, WA's Chamber of Minerals & Energy said it was vital that the tax be "simple, efficient and protect the international competitiveness of WA's resource sector".
In particular, that meant it must be designed to maintain "competitive neutrality", CME director Damian Callachor said.
"We are competing with other global provinces for investment and it's important the final MRRT does not compromise our sector's ability to compete on the international stage," he said.
WA Chamber of Commerce & Industry chief James Pearson said the chamber remained opposed to any new tax on the mining sector, and that the proposal should instead be included in the matters to be discussed at the government's proposed tax summit next year.
