The mining industry has warned new Prime Minister Kevin Rudd not to modify the mining tax, asking for a new deal that will boost productivity gains to combat falling commodity prices.
One industry veteran who did not want to be named told The Australian the leadership swap came at the ‘worst possible time for the industry’.
“However bad the Gillard government has been, Rudd’s return only further destabilises the business outlook until an election is held,” the senior mining executive said.
“There is no mining industry confidence in either Gillard or Rudd. Both are guilty of having eroded industry confidence.”
Managing director of gold producer Northern Star Bill Bearnent said the mining tax was a ‘disastrous policy that raised nothing and created so much uncertainty’.
“To think you’d even entertain tweaking that in this environment is absolute suicide,” he said.
The three mining giants – BHP Billiton, Rio Tinto and Xstrata – are secretly warning the industry will retaliate like it did in 2010 against Rudd before he was toppled by Julia Gillard.
They want a new deal where more tax receipts would be delivered under current arrangements by making sure the sector got the productivity gains required to deal with falling commodity prices, The Australian reported.
The mining industry launched an intense campaign in 2010 against Rudd after his stringent mining tax plan. Gillard bridged the gap by striking a secret deal with the three companies.
The deal did not raise substantial revenue due to offsets, the high dollar and falling commodity prices.
Australian Coal Association chief Nikki Williams said the sector was going through the most difficult market conditions in more than a decade. The conditions are considerably different to the commercial and budgetary conditions of 2007 and 2010.
Australian Mining recently reported the mining industry is going through a steep rise in the number of projects being deferred, cost blowouts and exploration funding cuts.
The Bureau of Resources and Energy Economics, the Reserve Bank and a number of the country’s top analysts said investment had peaked and 2013 would see the end of the 'commodities supercycle'.
The Minerals Council of Australia, which arranged the campaign against Rudd in 2010 for the mining tax plan, has been guarded in its remarks on Rudd’s return.
Chief executive Mitch Hooke said the sector was ‘looking forward to a policy debate in the weeks and months ahead’.