Australia, Mining Companies Yet to Resolve Tax Talks (Update2)

July 1 (Bloomberg) -- The Australian government and the mining industry have some way to go to resolve a dispute over a proposed mining tax, Treasurer Wayne Swan said.

"We've gone into these negotiations in good faith," Swan, who also serves as deputy prime minister, said today in an interview with radio station 2UE. "They are constructive but they've got some way to go as yet and I don't intent to engage in megaphone diplomacy about negotiations."

Asked about potential changes to the government's initial proposal of a 40 percent tax rate, Swan said he didn't "intend to put any boundaries around those discussions."

The comments follow media reports yesterday suggesting the government is willing to seek a compromise to resolve the issue before an election is called. Australian Prime Minister Julia Gillard late yesterday said she's encouraged by discussions over the fate of the proposed levy on mining taxes.

"I have been pleased by the constructive and disciplined approach that is being taken by both sides," Gillard said in an e-mailed statement. "I have nothing to report on the content of the discussions at this point."

Parts of the mining industry have given Gillard two weeks from June 25 to resolve the dispute over the proposed tax, saying it would reinstate advertising campaigns opposing the levy should talks fail. Gillard and companies including BHP Billiton Ltd. stopped advertising last week after Gillard took office saying her priority is resolving the issue.

Good Faith

"I have indicated the importance of good faith negotiations on this issue of critical national importance," Gillard, who ousted predecessor Kevin Rudd last week, said.

Gillard, Treasurer Wayne Swan and Resources Minister Martin Ferguson met in Canberra yesterday with BHP Billiton Ltd. Chief Executive Officer Marius Kloppers, Rio Tinto Group's Managing Director for Australia David Peever and Xstrata Plc's coal unit Chief Executive Officer Peter Freyberg, the Sydney Morning Herald said on its website yesterday.

The government is prepared to cede "pretty much everything" to end the saga, the Herald said, citing an official it didn't identify. Gillard's administration has shifted its position on the previously non-negotiable 40 percent tax rate, the Australian newspaper reported today, without saying where it obtained the information.

"'Talks with the government are continuing and they're constructive," Ben Mitchell, a spokesman for the Minerals Council of Australia, said today by phone.

Talks may extend throughout the week, Swan told reporters in Canberra during a late afternoon news conference yesterday.

"I can't put a timeframe on those discussions," Swan said today. "It's certainly our wish that they are resolved as soon as we practically can but the most important thing is to get the right result."