Saturday, May 22, 2010

BHP (NYSE: BHP), Rio Tinto (NYSE:RTP) Want Compromise on Outrageous Australian Tax

BHP (NYSE: BHP) and Rio Tinto (NYSE:RTP) are getting together with Australian government officials this week in an attempt to have adaptations made to the outrageous tax being levied against the industry to the tune of 40 percent, starting in 2012. Those taxes will include existing, as well as future projects.

Rio and BHP are looking for the government to exempt mine already operating, and to also increase the price-point at which the tax will kick in.

BHP CEO Marius Kloppers has already let it be known that he believes the tax in its current form is a disaster, and it will hold back investment in the country, companies will go offshore, and could do extensive, long-term damage to the mining industry in Australia.

It does make me wonder if this is what the Australian government planned from the beginning, and anything the give up will be looked at as a compromise by them, when in fact it was a cynical strategy to get a lot more out of the miners while making it look like the government is giving in.

They probably don't have the will to do it, but if they did, it would be a lot of fun to see the Australian government backpedal and reveal what they're really up to.

Already Fortescue Metals Group (OTC:FSUMY.PK)has put some of their projects on hold because of the tax, and there's sure to be more.

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