Australian Prime Minister Julia Gillard will hold a news conference in Canberra at 8:30 a.m. today to announce a deal between the government and big miners has been struck, ending a dispute that removed her predecessor from office.

Under the new agreement, miners will pay less tax in the early years of their operations compared with the initial proposal.

BHP Billiton and Rio Tinto's years-old, high-margin iron ore and coal businesses will be protected from the impact of the full tax by neutralising the issue of retrospectivity. The government will let the miners depreciate their assets from a starting point of current market value, instead of at generally far lower book values that had already been depreciated for years.

The government has also agreed to lower the 40 percent headline rate and increase the threshold at which the tax kicks in from about 6 per cent to nearly 13 percent. It will also defend commodities such as nickel, copper and gold, which require heavy processing once they come out of the ground.

Investors and analysts think the revisions were reassuring.

"It's heading in the right direction for the miners," said Perennial Growth Management fund manager Ken West.
"The market will need to run analytics through whatever the final outcome is, but the sentiment should be broadly positive."

According to Credit Suisse analyst Paul McTaggart, while the change in valuation methods was a good result for the mining sector, it meant the government's tax revenue would not be closely as high in early years.

The announcement of the compromise is expected to buoy mining shares when the bourse opens.