Fortescue’s Forrest says MRRT bane for new mining players
Fast-becoming giant mining firm Fortescue Metals Group Ltd (ASX: FMG) declared on Wednesday that the new players in the mining industry were poised to be penalised by the federal government proposed minerals resource rent tax (MRRT) while giant mining firms were set to gain more benefits once the measure is implemented.
FMG chief executive Andrew Forrest told reporters in Sydney that he has fully grasp the full intentions of the controversial tax measures which is the underlying reason why giant resource firms such as Rio Tinto Ltd and BHP Billiton were receptive of the MRRT following the companies negotiations with the Labor government prior to the national elections in August.
Mr Forrest argued that the MRRT focused too much value on the mining yields of a project as it trained undue attention on mining rights while leaving out the attending infrastructure investments of a given project.
In short, Mr Forrest claimed that "there is zero recognition for tax deduction purposes of the infrastructure, which means the designers meant to penalise anyone coming behind them wishing to develop infrastructure."
He further stressed that the MRRT would have served as "an extension of the restrictive nature of the existing infrastructure owned and established by BHP and Rio."
Experts largely viewed the MRRT as a compromise effort by Prime Minister Julia Gillard with BHP, Rio Tinto and Xstrata in order to repair perceived damages created by the steadfast pushing for its predecessor, the resources super profits tax (RSPT) also advocated by deposed Prime Minister Kevin Rudd.
Upon its implementation, thee MRRT is set to tax a headline rate of 30 percent on iron ore and coal projects' sites while other commodities were exempted by the government from the measures' coverage.
The federal government said that mine profits would be taxed based solely on mine-gate value, which excludes downstream processing plus a provision of 25 percent extraction allowance.