Cliffs said its Western Australian iron operations generated $US542 million ($A656.4 million) in annual revenue, around 23% of the company’s total revenue in 2009.
Carrabba said the new tax was unjustified and would heavily impact the company.
“As written, the government's proposal could result in the total effective tax burden on Cliffs' Australian profits increasing to approximately 60 per cent from a current rate of approximately 39 per cent,” he wrote.
A study into the expansion of the company’s Koolyanobbing mine to 11 million tonnes per annum from 8.5Mtpa was recently approved by the board.
“It should be understood, however, that our board provisionally approved this capital with the knowledge that cancellation could be executed if the proposed Australian 'super tax' legislation resulted in the project no longer being an efficient allocation of our shareholders' capital,” Carrabba wrote.
“This is one of many examples across the Australian mining industry where current and future investments would suffer if the proposed legislation becomes reality.”
The letter also hit back at claims the mining industry isn’t paying its fair share of tax.
“Our Australian-based iron ore operations have contributed $A625 million to tax revenues over the past 10 years,” Carrabba said.
“During this time, the company has also invested $460 million of capital in Australia and created over 400 new jobs.”
Cliffs said it would be unfair to disadvantage the mining industry against other Australian industries and other countries, such as Brazil and Canada, and believed the long-term, negative socio-economic consequences of the new tax would outweigh any near-term revenues.
“We urge you to help educate the political leaders there as to the real impact of this new, major and unwarranted tax imposition,” the letter said.
Cliffs owns the Koolyanobbing and Cockatoo Island iron ore mines in Western Australia, which were acquired through its 2008 takeover of Portman.
The company is listed in New York and Paris and is a member of the S&P 500 Index.