Australia's High Court dismisses challenge to mining tax

CANBERRA Tue Aug 6, 2013 8:43pm EDT

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CANBERRA Aug 7 (Reuters) - Australia's High Court found a controversial profits tax on iron ore and coal mines was constitutional on Wednesday, a major victory for the government that introduced the tax in July 2012 at the height of a China-led mining boom.

The High Court challenge against the tax was led by Australia's number three iron ore miner Fortescue Metals and its boss Andrew Forrest, who argued the tax discriminated against mining states and interfered with the rights of state governments to impose royalties.

But in a unanimous decision, the full bench of the High Court dismissed Fortescue's challenge to the Minerals Resource Rent Tax (MRRT).

"The Court held that the treatment of state mining royalties by the MRRT Act and the Imposition Acts did not discriminate between States and that the Acts did not give preference to one State over another," the court said.

The tax was negotiated by former Prime Minister Julia Gillard with global miners BHP Billiton , Rio Tinto and Xstrata, now Glencore Xstrata.

The latest figures show the mining tax, which starts once profits on a project reaches A$75 million, will raise only A$4 billion in its first four years, well down on the government's initial A$10 billion estimates.

Australia's conservative opposition, favoured to win elections on Sept. 7, has promised to scrap the tax if it wins power.

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