CANBERRA, Jun. 3 -- Australia's proposed resources super-profits tax, a 40% levy on domestic mining and petroleum operations, has sparked vigorous objections from the global mining sector since it was announced last month. Miners fear the tax increase could legitimise growing resource nationalism worldwide, making it more expensive and risky to extract minerals. The Minerals Council, the country's peak mining lobby, is holding its two-day Minerals Week conference in Canberra, with mining executives lining up to pressure the federal government to modify the tax. However, after several weeks on the back foot, government officials have been stepping up their defence of the proposals in recent days. Dow Jones reporters David Fickling, Ray Brindal and Rachel Pannett are covering the conference:
0409 GMT: "A slow insidious decline" in activity is likely for Australia's minerals sector if the government proceeds with its plan to tax the super profits of resource companies, says Peter Johnston, senior vice president of lobby group Minerals Council of Australia and chief executive of nickel producer Minara Resources (MRE.AU). Johnson's is one of a number of speeches at the conference designed to shore up opposition to the tax, lest any miner agree with government analysis about the massive windfall profits being made by the industry. Typically in these circumstances, sector leaders must restate their opposition and round up laggards. Johnston says a sector decline will start with a winding back of exploration activity with drilling rigs being idled. He also dislikes the retrospectivity of the tax and the fact it's a new tax by world standards so it's untested, while warning of Australia's "complacency about international competitiveness."
0034 GMT: While miners want to keep public debate focused on tax, given what they regard as the government's outrageous proposal for a super tax on mining company profits, Resources Minister Martin Ferguson reminds the conference that investment decisions will always take account of taxation regimes, but aren't blinded by them. Indeed, investment decisions are based on more than tax, he says, providing a long list of where Australia is at the top end of international competitiveness: A stable political system, open, transparent and competitive markets, sound regulation and good governance, a resilient economy, world-class expertise, supportive and robust financial services, vast untapped resources, reliable transport, good security, and few language barriers. "We rarely talk about all these advantages together, but we all know they do matter," he says.
0029 GMT: Invoking the old chestnut that "in this world nothing can be said to be more certain, except death and taxes," Resources Minister Ferguson attempts to address the self-described "elephant in the room" - the Resource Super Profits Tax. But the fact is he has little to offer industry at present, with Prime Minister Kevin Rudd saying Tuesday miners shouldn't anticipate a compromise deal anytime soon. "We know you are concerned about things like retrospectivity, the treatment of minerals with different outlooks and cost structures, and taxing points," Ferguson says. "We are looking at ways your concerns can be addressed, for example, through generous transition arrangements." Perhaps his best comment to sum up the general mood of the conference would be this: "This is a free country and we are all entitled to our views". There'll be more than a few mining executives bailing up the minister today to do just that.
0022 GMT: Pity Sir Rod Eddington, the former British Airways chief executive. Since the Labor government's days in opposition, he has been Prime Minister Rudd's unofficial point man in the business community. He has also chalked up an unpaid role as chair of Infrastructure Australia--a government agency that made a point of welcoming the government's tax review last month--and a string of non-executive directorships, including with News Corporation, owners of Dow Jones. But having friends in government and friends in business could prove awkward during an event when the two constituencies are expected to be at each other's throats. He is due to address the Minerals Week dinner Wednesday on behalf of Rio Tinto, another of his non-executive directorships and a stern critic of the mining tax. With government and business at loggerheads, it will be a minefield working out what line to take. Trusting the mood of the moment may be the easiest way: Sir Rod's office says he'll be speaking off the cuff.
0015 GMT [Dow Jones] Rudd went on the offensive Tuesday in the lead up to the conference, questioning the credibility of the industry and council in their opposition to the proposed mining tax, while reiterating the government is fundamentally committed to delivering the tax. Rudd noted that past industry scare campaigns against the Petroleum Resource Rent Tax, the Mabo native title law in 1990s and the changes to labor laws ahead of the 2007 general election created a furore at the time, with the mining industry saying these changes would "end in the collapse of the industry." In the event, none of these campaigns proved accurate, nor does this current one on the super profits tax have that potential, Rudd told reporters Tuesday.
0011 GMT: At a time Australia is defending its mining tax against a groundswell of industry opposition, it seems a touch odd that Rudd has passed up an opportunity to defend the tax in person. He won't be attending the conference dinner, scheduled to be held in Parliament house Wednesday. It leaves the event without a political speaker: Rudd delivered the keynote speech in 2008 and sent his deputy Julia Gillard in 2009. It's likely to be viewed as a snub by the industry and could broaden the gulf between miners and the government, making any negotiations over a potential compromise on the tax difficult. Still, eager to keep any awkwardness (or outrage) out of the public eye--and photographers' snapping range--Rudd told reporters Tuesday he may have miners around for a drink and a "cheery chat" at the Lodge. As for passing up the invite to speak, that's "unfortunate". He has a double booking at a Labor party function.