Confirmation the magnetite sector will pay little or no tax under the Australian Government’s proposed Mining Rent Resources legislation has prompted emerging producers to fight for exemption from the tax.
Australia’s Resources, Energy and Tourism Minister Martin Ferguson says the sector won’t contribute any revenue under the legislation because of the low value of magnetite prior to intensive processing.
“That is the very reason why magnetite should be exempted from the Mining Tax altogether,” says the Magnetite Network’s executive director Megan Anwyl.
“We welcome minister Ferguson’s comments and also note there has been some real improvement in the valuation methodology since the recent second draft exposure version of these complex proposed laws.”
“It is not logical to impose a new compliance burden on an industry that, in the minister’s own words, will be liable for little or no tax. Many projects are actively seeking finance and if there’s no tax revenue to be had, why include magnetite?” she says.
The Magnetite Network was established in 2009 to help promote the goals of the emerging magnetite iron ore industry in Western Australia. It now represents 12 emerging magnetite producers in Western Australia, South Australia, New South Wales and Tasmania. It is continuing to lobby to have the legislation amended to exempt magnetite.
The network says the tax is to be calculated at the point a resource is mined from the ground, meaning magnetite in its unprocessed state offers negligible tax revenue for the Commonwealth.
There are currently two magnetite mining operations in Australia - Grange Resources’ Savage River project in Tasmania and the OneSteel Whyalla project in South Australia. Several other projects are under development, including CITIC Pacific Mining’s Sino Iron project in WA’s Pilbara.
The Magnetite Network says the value-adding required of magnetite iron ore to allow it to be converted into concentrate or pellets for export to foreign steel mills would create hundreds of long-term permanent jobs and requires considerable infrastructure development in regional Australia.
“It goes against the national interest to discourage investment in an emerging industry that value adds, is very capital and jobs-intensive and offers real carbon benefits at a time when there is a massive need to create new jobs in Australia,” Megan Anwyl says.