BHP warns Australia resource tax could hit investment

Australia's proposed 40 percent tax on resources profits could not only drive investment overseas but impact expansion at BHP Billiton's Olympic Dam mine, chief executive Marius Kloppers said Sunday. The centre-left Labour government is holding firm on its decision to tax the so-called "super profits" of the mining companies reaping the benefits of an Asian-driven commodities boom.
But Kloppers said the government was attempting to take "another bite of the cherry" and the proposal could impact expansion at its Olympic Dam uranium and copper mine in South Australia. "This new tax proposal does upset the apple cart there a little bit," the head of the world's biggest diversified mining company told state television in an interview.
But he said this did not mean the project had been shelved. "What I can say though is that if you move the tax rate from about 44 percent to 57 percent or possibly more, that doesn't make it any easier," he told the ABC.
Kloppers said while he did not expect the proposed tax to impact on the company's plans for an iron ore joint venture with Anglo-Australian miner Rio Tinto, other Australian projects could be affected.
"The uncertainty is in place - it would be very difficult to approve any of those projects," he said, adding that no BHP operations were due for a final investment decision imminently.
The government hopes the new tax, which helped see resources stocks dive last week after it was announced on Sunday, will raise 3.0 billion dollars (2.67 billion US) in the first year of operation from June 2012. But Kloppers said it would mean Australian mining companies paid twice the tax rate of other major mining countries such as Canada and Brazil and drive investment overseas.
"There will be an impact on investment, jobs and growth if the tax is implemented in an unchanged form," he said.
"I think that what one can safely say is that if you pay twice the tax in one country that you pay in another for the same product then relatively speaking that other country will become more attractive."
Kloppers said he was not opposed to a resources tax, but any new levy should only be placed on new developments and the there should be different tax rates for different products.