Gindalbie Metals announced on Tuesday it will pursue its Karara iron project despite the mining companies' concerns on the proposed super profits tax by the government. However, the tax will cut down its returns for the project.

In a statement released by Gindalbie, The Karara project will go on as planned backed by the company's Chinese partner, Ansteel, which concentrates on steel mills.

However, the proposed RSPT will have a big effect on the project, the company said.

"They will reduce the returns for the project and put planned and possible expansions at risk," chief chairman Geoff Wedlock revealed to shareholders.

The Karara project is expected to generate $1 billion annually in export revenues, and will increase to $3 billion for the next few years.

The project is also expected to produce around $55 million annually in government royalties on start-up if the existing tax rules applied, and may climb up to $165 million a year as the project exands.

The company said that the royalty payments are included to the corporate and other taxes that the company pays to the government.

Gindalbie added it did not foresee the project's return as “super profits”, but as an acceptable return for the high risk taken by investors.

Gindalbie agrees with other mining companies that RSPT should be implemented to new investments and not existing projects or investments that are currently ongoing.

Gindalbie will continue its consultations with the federal government over the tax, but still believes the outcome of RSPT is “unjustified and unproven.”

"Already, reputational damage has been done to the certainty of business conditions that overseas investors in the Australian resources industry have relied upon,” the company quips.

Gildalbie said is worried the proposed tax may push larger projects to be developed in foreign shores instead in the country.