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Canberra, Australia (UPI) May 31, 2012
Australian Prime Minister Julia Gillard told the country's top mining executives that Australian citizens deserve to share in the mining boom.
Speaking Thursday to the Minerals Council of Australia, Gillard referred to the mining sector as the Australian economy's "strong right arm."
"Australians don't begrudge hard work and we admire your success," she said.
"But I know this, too: they work pretty hard in car factories and at panel beaters and in police stations and hospitals, too.
"And here's the rub. You don't own the minerals. I don't own the minerals. Governments only sell you the right to mine the resources."
Australia's resource boom has been fueled by strong demand for raw materials from China and India.
"Our economy is the envy of the world," Gillard said. "Our mining industry is the envy of the world. There's nowhere in the world you'd be better off investing and there's nowhere in the world where mining has a stronger future."
Minerals Council of Australia Chief Executive Officer Mitchell Hooke, interviewed by the Australian Broadcasting Corp. following the prime minister's speech said the industry had never contested the fact that the sovereign state owns the minerals.
"It's the reason why we accept that we pay a much higher rate of tax than anywhere else, than any other industry," he said.
Australia's Mineral Resource Rent Tax, which goes into effect July 1, places a 30 percent tax on the profits of the largest iron ore and coal miners in Australia, including global miners like BHP Billiton, Rio Tinto and Xstrata. It is expected to raise $11.2 billion over three years.
Hooke warned of complacency in the sector amid a fiercely competitive global environment.
"Just because you've got the minerals here in Australia doesn't mean that the investment and the expertise and the skills will actually develop them. We've got to attract that investment," he said.
But Fortescue Metals Group CEO Neville Power said higher taxes and other government measures are discouraging mining investment, adding that Australia was at risk of "killing the goose that lays the golden egg," The Australian newspaper reports.
"We can't just go around and tax whichever sector of the economy happens to be doing well in that particular period of time," Power said.
Also this week, the Queensland government granted conditional approval for the $6.4 billion Alpha coal project, which is expected to be one of Australia's largest coal mines.
The open-cut coal mine, operated by Hancock Coal, is expected to produce 30 million tons per year. The project needs federal environmental approval to proceed.
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