Morgan Stanley: Mine tax to raise A$85 billion
Morgan Stanley on Friday said the Australian government is set to raise at least A$85 billion (US $70 billion) from the proposed "super tax" on mining profits.
Morgan Stanley's analysts Craig Campbell and Cameron Judd, who are both based in Melbourne, said mining firms Rio Tinto Group and BHP Billiton Ltd. are expected to be the largest contributors in the mining tax. Rio Tinto alone is forecasted to pay A$71 billion.
The iron ore productions are expected to be the most affected by the proposed tax, Morgan Stanley said.
The Australian government have been drawing flak from the mining industry after it announced a 40 percent tax on profits of resource companies beginning 2012. Mining giants led by BHP, Rio, Xstrata Plc and Fortescue Metals Group Ltd. have threatened to review their mining investments in Australia in reaction to the planned new tax measure.
BHP Chief Executive Officer Marius Kloppers warned that the new tax would thwart investments, encourage companies to move offshore and endanger the growth of the mining industry which contributes 9 percent to Australia's economy.
"We expect a watering down of the proposed resource super profit tax and therefore most mining company share prices have factored in the worst case RSPT scenario," Morgan Stanley said.
Shares of BHP fell fell 3.2 percent to 1,768.5 pence in London trading, a six-month low. The stock has dropped 13 percent since the tax proposal was announced May 2. London based Rio, saw its shares to drop 5.8 percent to 2,812 pence, also a six-month low. It has slumped 17 percent since the plan was proposed.