The federal government may make more concessions on its mining tax to iron ore miners, the Chamber of Minerals and Energy of Western Australia says.
Federal Resources Minister Martin Ferguson had agreed to consider requests to provide tax rebates for exploration costs and to exempt the burgeoning magnetite sector from the tax during a period of industry consultation, the chamber's chief executive, Reg Howard-Smith, told Reuters.
"The minister indicated these issues would be included in the terms of reference," establishing parameters for modifying the tax under a government-backed panel. "The minister made it clear he is keen to continue to look at some assistance for these sectors of the industry," he said.
Mr Ferguson told about 150 mining executives in Perth there was plenty of time to work through their concerns before the new tax due to take effect in 2012, but did not guarantee any exemptions, according to Mr Howard-Smith.
"I'm pretty sure industry and government are very keen to see that these consultations proceed pretty quickly," Mr Howard-Smith said. "We'd like to see it happen before an election is called."
The federal government on Friday sought to end a damaging dispute with mining executives and investors by dumping its far-reaching 40 per cent "super profits" tax for a 30 per cent tax limited to iron ore and coal mining.
The move could help clear a major hurdle for the government to call an early election, which polls suggest Prime Minister Julia Gillard can win.
Political analysts speculate an election will be held as early as August 28.
The watered down tax has angered small iron ore miners, who said the new regime favours a handful of international majors which held closed-door negotiations with the government over its design.
The original tax included exploration rebates worth $520 million in the first year and $600 million in the second year.
Under the watered down tax, smaller miners with profits below $50 million a year are exempt from paying the tax, but miners want this threshold doubled to $100 million.
Efforts by miners to secure rebates on exploration costs included in the original proposal were stripped out of the new tax deal.
In addition, a program employed successfully in Canada to allow exploration companies to pass on tax loss credits to investors was not even mentioned in the new tax.
A growing number of magnetite iron ore projects in Australia are being targeted for development by Chinese firms intent on reducing reliance on the giant hematite deposits mined by Rio Tinto and BHP Billiton.
Mr Ferguson met privately with representatives of that sector earlier today, Mr Howard-Smith said.
"The minister acknowledged magnetite is an area that needs to be addressed as one of the first cabs off the rank," he said.
Magnetite ore is used to produce almost half the world's steel but in Australia magnetite accounts for less than 4 per cent of overall production.
Baosteel Iron & Steel, Anshan Iron & Steel Group (Ansteel), Sinosteel, Citi Pacific Mining, China Metallurgical Corp and others are backing projects that industry majors have largely ignored because they contain magnetite ores.
Reuters