Cliffs: : Australia investments might be cancelled if new resource tax realized

Thursday, 27 May 2010 14:05:42 (GMT+3)   |  
       

Cleveland, Ohio, US-based metallurgical coal and iron ore pellet producer Cliffs Natural Resources Inc. (Cliffs), which has iron ore assets in Australia, on May 26 released a letter to its shareholders, criticizing Australia's proposed super tax on resources.

The letter signed by Joseph Carrabba, the company's president, chairman and CEO,  stated that, if implemented as proposed, the tax would seriously erode the competitiveness of one of Australia's most successful and economically vital industries.

Mr. Carrabba stated that the Australian government's proposal could result in the total effective tax burden on Cliffs' Australian profits, increasing to approximately 60 percent from a current rate of approximately 39 percent and making the Australian resources industry the highest taxed in the world.

The letter said that expansion of company's primary production complex at Koolyanobbing, Western Australia could be cancelled if the tax enters into force.

"As many other Australian natural resources producers have communicated, Cliffs believes that any tax reform should not disadvantage the mining industry relative to other industries in Australia as well as other resource-rich countries such as Brazil or Canada," Carrabba said, adding that it would be extremely disappointing to see investment incentive destroyed and capital flow out of Australia.

As SteelOrbis previously reported, in addition to mining giants BHP Billiton, Rio Tinto and Xstrata, Australian steelmaker OneSteel has also criticized the new tax.


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