Big miner Xstrata will resume a key project that it postponed after former Prime Minister Kevin Rudd proposed the troublesome resources super-profits tax.

The Anglo-Swiss miner said the decision to continue the Ernest Henry mine expansion in Queensland came after new Prime Minister Julia Gillard officially proclaimed the revised resources tax regime this morning.

Xstrata previously had announced to stop $400 million in works to enlarge the Ernest Henry copper mine. It also postponed $186 million worth of activities including the planned expansion of its Wandoan thermal coal project in Queensland, and an exploration program around Cloncurry and Mt Isa.

However, the mining giant said this morning that full work would continue at the Ernest Henry expansion, and the exploration spending would be reinstated.
Xstrata is yet to announce its plans for the Wandoan coal project.

Xstrata Copper chief executive Charlie Sartain said the move to retain existing taxation and royalty structures for copper had given the company ''sufficient confidence to resume with immediate effect these significant projects that form an important part of our business strategy in North West Queensland."
''Our copper operations in north Queensland play a vital role as an economic driver in the region,'' he said in a statement.

Under the new tax deal, the Gillard government would restrict the new regime to iron ore, coal, oil and gas, reducing affected companies from 2500 to 320.
The government is to replace the proposed resource super-profits tax with a minerals resource rent tax, similar to that which already applies to offshore oil and gas production.

The new levy will apply to iron ore and coal projects at a headline rate of 30 per cent, down from the originally proposed 40 per cent.

The cut-in rate of the new regime has been adjusted to the long-term bond rate plus 7 per cent. Other commodities will not be included.