Australian iron ore producer Fortescue Metals Group Limited (Fortescue) has criticized the Australian government's statement made on July 14 to the effect that it would be able to raise AU$10.5 billion by 2014 through its proposed Minerals Resources Rent Tax (MRRT), saying that "the transitional capital arrangements of market value of mining rights favor the big miners (BHP Billiton, Rio Tinto and Xstrata) to provide shelter from retrospectivity."
Slamming the Australian government's statement, Fortescue chief financial officer Stephen Pearce said in a company statement that it provided "no clarity on how or where the tax would be raised." Mr. Pearce said, "Today's economic statement provides no transparency in regard to how the proposed new tax will be raised."
Pointing out that Fostescue will continue to press the government to release the financial modeling based on the discussions it had with BHP Billiton, Rio Tinto and Xstrata, Mr. Pearce said, "The government has again refused to disclose the underpinning basis used to calculate the proposed MRRT. This lack of transparency suggests there is something hidden within the tax regarding its structure and basis."
"The uplift rate of the long-term bond rate plus seven percent penalizes emerging companies who will have much higher costs of funds than the three companies," he said.