Mining honchos warn investors could flee Australia in droves over sovereign risk
Several of the most prominent figures in the Australia mining industry have warned that country could see investors flee in droves if companies are "double-taxed" and federal refunds are denied as compensation for hikes to state mining royalties.
The Australian reports that a number of leading figures in the country's resources sector, including former BHP Billiton chairman (ASX:BHP) Don Argus, have spoken out publicly against the possible introduction of caps on federal refunds for state royalties that are currently provided under the controversial minerals resources rent tax (MRRT), while also pointing to the harm done to Australia's investment appeal by the prevailing tax regime.
Argus told the Australian that the government shouldn't "start double-taking the resources companies because you will have no one investing capital here then. As it is, people are looking at the sovereign risk and starting to wonder what's going on."
Hugh Morgan, former Western Mining Corporation head and a member of Anglo America's (LSX:AAL) Australian advisory board says that on-going projects have seen a "dramatic loss of value" due to the current tax regime, and that "this major capital loss has shaken many CEO's comfort in project opportunities in Australia."
Former boss of zinc miner Zinifex Greg Gailey called double-taxing of mining projects a "major issue for the industry" and expressed concern that a cap on federal refunds for state taxes would “[place] on industry a burden that ought to be resolved via the commonwealth and the states."
Efforts by both the federal and state governments to increase the tax burden of the country's miners has generated immense controversy. Queensland's hikes to state royalties led to threats from miners to annuls projects, while critics have castigated the federal government's MRRT for its failure to net any revenue from the three biggest mining companies operating in the country during its first few months of operation.