On June 13, Andrew Forrest, outgoing CEO of Australia's third-largest iron ore miner, Fortescue Metals Group Ltd, said that the 30 percent tax rate suggested by the recent Australian mining tax draft legislation will affect his company much harder than its rivals BHP Billiton, Rio Tinto and Xstrata. He also added that this tax increase will cost Fortescue at least a five percent value loss.
The Australian federal government unveiled draft legislation for the planned mining tax last week, having consulted with Rio Tinto and BHP Billiton, Australia's largest and second largest iron ore producers, respectively, and also with Xstrata, a major coal producer.
The tax, due to take effect in July next year is expected to raise an estimated A$7.7 billion ($8.1 billion) in revenue in its first two years. It is a revised version of the first draft proposing a 40 percent tax.
Mr. Forrest warned that they will go for a High Court challenge if the federal government goes ahead with the proposed mining tax in its current form. He will also meet with the federal government and with opposition leader Tony Abbott on June 14 in Canberra to voice his disappointment with the mining tax.
Fortescue has a market value of about $21 billion and in February reported a sevenfold jump in its half-year profit on the back of higher iron ore prices.