News Wrap

IN THIS morning’s News Wrap: mining tax won’t lift budget for years; coal reserves understated, ICAC told; and China monitors Gindalbie’s Karara closely.

Staff Reporter

Mining tax won’t lift budget for years

Fortescue Metals Group says the federal budget will receive little benefit from the mining tax for years to come and it is unlikely to pay the tax over the next half decade, according to the Australian Financial Review.

The revelation came at Senate committee hearings into the troubled Minerals Resource Rent Tax, which so far has raised only a small fraction of the $2 billion forecast for this financial year.

Fortescue chief financial officer Stephen Pearce indicated the design of tax meant the company would be exempt from any payments during a period when the company expected its corporate tax and state royalty payments to more than double to $4 billion.

Coal reserves understated, ICAC told

A corruption inquiry has heard that a mining company chaired by former union official John Maitland gave the New South Wales government a deliberately low estimate of the amount of coal at a site in the Hunter Valley before then-mining minister Ian Macdonald gave it a coal exploration licence over the area, according to the Australian Financial Review.

In an email on December 24, 2008, shown at the NSW Independent Commission Against Corruption on Monday, two of the company’s former directors discussed their submission to the government for an exploration licence for an underground training mine and a commercial mine at Doyles Creek near Newcastle.

“We were conservative on the overall tonnage as we only wanted to indicate we had sufficient resource to justify the training mine,” former Doyles Creek Mining shareholder and director Glen Lewis wrote to business associate Craig Ransley.

China monitors Gindalbie’s Karara closely

China is closely monitoring progress at Gindalbie Metals’ Karara iron ore joint venture with state-owned steel maker Anshan Iron and Steel – with the future of the fledgling Australian magnetite industry riding on its success, according to the Australian Financial Review.

Gindalbie managing director Tim Netscher says Chinese authorities are scrutinising the $2.7 billion Karara project, which Western Australian Premier Colin Barnett and federal Resources Minister Gary Gray will officially open on Tuesday.

“We heard it from the horse’s mouth six months ago in Beijing when George [Jones] and I were visiting,” Netscher said.

“They made it very clear there will be no investment in magnetite until our project is fully up and running.”

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