MELBOURNE, Jul 02, 2010 (Dow Jones Commodities News via Comtex) -- (Adds details on Ernest Henry underground copper mine and exploration in north Queensland)

Xstrata PLC (XTA.LN) said Friday it is reviewing a possible restart of early works on its A$6 billion Wandoan thermal coal project and will resume its underground expansion of the Ernest Henry copper mine in light of changes made to the Australian government's proposed mining tax.

The Switzerland-based, London-listed mining company put spending on early works at the Wandoan mine in Queensland state on hold last month saying the project wouldn't be viable under the government's original Resource Super Profits Tax proposal. It also suspended the A$589 million Ernest Henry underground expansion and a three-year A$30 million exploration program in north Queensland.

The government has radically reworked the mining tax, lowering the headline rate to 30% from 40%, raising the threshold at which it kicks in and making generous concessions on the deductions for depreciation.

"We are currently reviewing the situation regarding the potential recommencement of early works (at Wandoan) but no decision has been made as yet," a spokesman for Xstrata said. "We will continue with the feasibility studies and acquisitions of land as we always said we would."

Xstrata's copper chief Charlie Sartain said the proposed mining tax will now no longer affect the economics of its copper mines.

"The proposal to retain the existing taxation and royalty structures for our copper business has given us sufficient confidence to recommence with immediate effect these significant projects."