KEVIN Rudd was last night locked in tense discussions with the nation's most senior mining executives as industry leaders ratcheted up their campaign against Canberra's super-profits tax.
As a further $7 billion was wiped off the stockmarket value of Australian mining companies and industry doyen Don Argus warned that the new tax flashed an "amber warning light" to global investors, the Prime Minister refused to comment on whether he would revisit the proposed 40 per cent tax on mining company profits.
Mr Rudd said only that he believed the rate was "about right" before attending a private dinner with industry chief executives led by Fortescue Metals Group's Andrew Forrest, Rio Tinto Iron Ore's Sam Walsh, BHP Billiton Iron Ore's Ian Ashby and Woodside Petroleum's Don Voelte.
It is believed the dinner was arranged several weeks ago at the offices of Perth law firm Lavan Legal but took on a new significance in the wake of Mr Rudd's announcement on Sunday of the new tax and the massive sell-off of resources stocks in the past two days.
Start of sidebar. Skip to end of sidebar.
End of sidebar. Return to start of sidebar.
Fortescue shares have fallen 11 per cent in the past two days, with BHP down 5.3 per cent and Rio down 7 per cent as analysts have slashed profit targets.
Last night's crisis talks were expected to be tense after BHP and Rio led opposition to the "resource super-profits tax" in recent days, amid forecasts it could slash earnings by 20 per cent from 2013.
The RSPT will be on top of state royalties, although the commonwealth will refund royalty payments after it collects the tax.
One of the executives who attended the dinner said later that Mr Rudd had listened to their concerns and told the miners he was prepared for further consultations.
The value of Australia's biggest resources companies has crashed $16bn in the past two days to $320bn amid uncertainty about the impact of the tax on mining industry profits and projects.
West Australian iron ore explorer Cape Lambert Resources yesterday announced it would halt its search for minerals in Australia due to the new tax, while Resources Minister Martin Ferguson said he expected companies to put some projects on hold while they examined the implications of the tax.
BHP chief executive Marius Kloppers yesterday launched a scathing attack on the plan, unveiled in response to the Henry tax review, disputing the government's claim that the industry had short-changed the nation on tax.
"That is simply not true," Mr Kloppers said in an email to staff, obtained by The Australian.
"We believe that this tax will damage the resources industry in Australia and erode the future prosperity of all Australians and have an impact on BHP Billiton."
Separately, Mr Argus, who retired as BHP chairman and stepped down from the board in March, described the new tax as a "blatant grab for money".
Mr Argus, one of the most substantial business figures of his generation, said all calls he had taken from colleagues offshore had raised the spectre of sovereign risk.
Stressing his comments were made as a private citizen, Mr Argus said: "Australia has been an attractive risk in the past, but the nature of the phone calls I've taken indicate there is now an amber warning light. This is really a surcharge for the resources industry; it's a blatant grab for money."
Ian Smith, whose company Newcrest Mining's bid for miner Lihir Gold would create the world's fourth-biggest gold producer, said he doubted the super-profits tax would pass parliament in its current form. "The expectation of this going through parliament, if you want to put a probability on it, I'd put it at a fairly low number," he said.
Read more about Rudd giving ground to miners at The Australian.
Auto parts suppliers see profits returnMiners bracing for Henry review tax grab
