Fortescue Metals put multi-billion-dollar iron ore projects on hold over a major new mining tax yesterday, raising pressure on Australia over a levy that has incensed the key export sector.
And chief executive Andrew “Twiggy” Forrest warned the move would force firms to look for foreign money, particularly from China, to help with further investment.
Forrest said his company might have to sell the two Western Australia expansion projects, worth a combined US$15 billion in proposed investment, as the tax affects funding opportunities.
“If we can’t rely on our own revenues to finance our own projects anymore, it absolutely means that the only source of revenue, particularly for the mining industry, will be the government of China,” he told reporters.
Fortescue said it was shelving development of its flagship Solomon Hub and Western Hub in the Pilbara region, center of a booming mining industry that steered Australia through the financial crisis without entering recession.
The proposed 40 percent levy on miners’ “super profits” has drawn a furious response from companies, with Anglo-Australian giant Rio Tinto reviewing all capital projects in the country.
Fortescue said it was placing on hold development of its flagship Solomon Hub, which is expected to produce about 160 million tonnes of iron ore a year and employ 21,000 people for its construction and operations.
The company also put the brakes on planning for its Western Hub, a US$6 billion proposed investment, which was estimated to provide 11,500 jobs.
BHP Billiton was said to be considering slashing dividend payments to hundreds of thousands of shareholders, dealing a blow to the Australian government which has framed the tax as important to upcoming elections.
Concern has also spread abroad with China raising the tax with Australian Trade Minister Simon Crean in Beijing talks this week.
“The issue was discussed in detail and both sides agreed to continue discussions on the issue,” said a spokesman for Crean, who was quizzed by Zhang Ping (張平), head of China’s National Reform and Development Commission.
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