SYDNEY: Australia's government and key mining companies are on the brink of a framework agreement on a mining tax compromise, the Sydney Morning Herald reported, quoting sources with knowledge of the talks.
Based on the proposed deal, the government has given ground on the headline 40% tax rate and the new trigger point for the tax would be around 12% up from an initial proposal for about 5%, the paper said on its website.
The tax deal would also give miners a break on retrospective projects, enabling them to roll lucrative iron ore operations in the Pilbara and coal mines on the east coast, into the new tax regime at market value.
"It's understood that BHP Billiton, Rio Tinto and Xstrata have agreed with the government now on the key elements of a new resources tax structure...," the Herald report said, citing sources close to talks between the government and miners.
The government and global miners Rio Tinto, BHP Billiton and Xstrata Plc, are locked in a second day of talks on Thursday, July 1 over the tax.
"We're not commenting," a BHP spokesman said of the report.
Government officials were not immediately available for comment.
The Australian dollar rose around 1/3% to US$0.8366 (RM2.72) from around US$0.08335 before the report.
An agreement would remove uncertainty in the market and any watering down of the tax proposal is considered positive for investments and hence the Aussie dollar, traders say.
The stock market also came off its lows off the day, as did global miners BHP Billiton and Rio Tinto, on news of the report.
The proposed mining tax threatens more than US$20 billion in investment, according to mining companies, but no major project has yet been scrapped and several have actually been advanced since the tax was unveiled on May 2.
The Australian MINING INDEX [] has underperformed the global mining sector by about 4% since the mining tax was first announced on May 2, despite a weakening in the Australian dollar over that time.
Analysts say that any firm deal would be a positive for mining shares as it removes a key risk factor while any easing in terms of the tax would be a clear positive as investor have already priced in the worst-case scenario.
"This would signal the first major development in the debate between the government and the mining industry over the tax," said Grant Craighead, a mining analyst for Stock Resource in Sydney. ' Reuters
Based on the proposed deal, the government has given ground on the headline 40% tax rate and the new trigger point for the tax would be around 12% up from an initial proposal for about 5%, the paper said on its website.
The tax deal would also give miners a break on retrospective projects, enabling them to roll lucrative iron ore operations in the Pilbara and coal mines on the east coast, into the new tax regime at market value.
"It's understood that BHP Billiton, Rio Tinto and Xstrata have agreed with the government now on the key elements of a new resources tax structure...," the Herald report said, citing sources close to talks between the government and miners.
The government and global miners Rio Tinto, BHP Billiton and Xstrata Plc, are locked in a second day of talks on Thursday, July 1 over the tax.
"We're not commenting," a BHP spokesman said of the report.
Government officials were not immediately available for comment.
The Australian dollar rose around 1/3% to US$0.8366 (RM2.72) from around US$0.08335 before the report.
An agreement would remove uncertainty in the market and any watering down of the tax proposal is considered positive for investments and hence the Aussie dollar, traders say.
The stock market also came off its lows off the day, as did global miners BHP Billiton and Rio Tinto, on news of the report.
The proposed mining tax threatens more than US$20 billion in investment, according to mining companies, but no major project has yet been scrapped and several have actually been advanced since the tax was unveiled on May 2.
The Australian MINING INDEX [] has underperformed the global mining sector by about 4% since the mining tax was first announced on May 2, despite a weakening in the Australian dollar over that time.
Analysts say that any firm deal would be a positive for mining shares as it removes a key risk factor while any easing in terms of the tax would be a clear positive as investor have already priced in the worst-case scenario.
"This would signal the first major development in the debate between the government and the mining industry over the tax," said Grant Craighead, a mining analyst for Stock Resource in Sydney. ' Reuters
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