Fortescue Escalates its Objection to MRRT

22 July 2010:

Fortescue Metals Group Limited (Fortescue) has today escalated its objection against the proposed Minerals Resource Rent Tax (MRRT) and has called for Prime Minister Julia Gillard to discuss the proposal with the wider community.

Fortescue Chief Executive Officer Mr Andrew Forrest has also called on the Prime Minister to include Greens leader Bob Brown in those discussions.

“Senator Brown appears severely misinformed about the benefits that he himself enjoys from the mining industry,” Mr Forrest said.

Mr Forrest said Fortescue had reviewed the limited publicly available information on the MRRT and had serious concerns about the impact of the tax on future development of regional mining infrastructure.

Fortescue had identified that established companies which deny third party access to their rail and port infrastructure will receive more favourable treatment than new miners and other infrastructure developers who provide third party access to their systems.

“We are at a stage in Australia where we have to develop infrastructure to export our resources. Not every company has the financial capacity or resource capability to develop their own infrastructure. It is a necessity for any Government to promote infrastructure development which is available for third party use. This tax fails to incentivise investment in new infrastructure so needed by small miners with undeveloped projects,” he said.

Mr Forrest said the other 99 per cent of iron ore and coal mining companies were excluded from the negotiations which led to the design of the MRRT and they deserved better than being asked to meet with a committee after the election.

“The rest of the Australian mining industry, which is working to deliver the major job growth opportunities for all Australians, has not had a word of consultation but is being asked to believe that everything will be dealt with after the election,” he said.

“Frankly, that is just not good enough. We have major concerns about the design of the MRRT and its ability to raise the $10.5 billion. If it fails to achieve that revenue, where will the money come from? More than likely it will come from a redesign of this tax proposal – it will come from greater demands on the iron ore and coal mining industry.”

Mr Forrest said Fortescue had written to the Prime Minister asking specifically for amendments in the MRRT to address the treatment of infrastructure in calculating taxable profit and in the starting base. In addition Fortescue stated that the following would need to be addressed:

  • Interest deductibility;
  • Dropping the bias against infrastructure that serves the public;
  • An increase in the uplift rate to reflect actual costs of finance; and
  • The exclusion of magnetite from the MRRT.

Mr Forrest said Fortescue disputed Prime Minister Julia Gillard’s assessment that the mining industry had agreed to the MRRT and that Australians would get a better return from this commodity boom.

“The MRRT is unfair on the rest of the mining industry and the Government’s promise to deal with us after the election is worrying us all,” Mr Forrest said.

ENDS

For further information please contact:
Paul Downie
FD Third Person
T: +61 8 9386 1233
M: + 61 414 947 129
E: paul.downie@fdthirdperson.com.au

Cameron Morse
FD Third Person
T: +61 8 9386 1233
M: + 61 433 886 871
E: cameron.morse@fdthirdperson.com.au