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BHP say Australia mining tax threatens expansion
May 10, 2010 / 2:09 AM / 7 years ago

BHP say Australia mining tax threatens expansion

SYDNEY (Reuters) - BHP Billiton Ltd/Plc has warned billions of dollars in expansion projects in Australia, including its Olympic Dam project, would be placed in jeopardy if parliament approves a new tax on mining profits.

BHP is studying a proposal to lift annual production at the Olympic Dam mine to 730,000 tonnes of copper and 19,000 tonnes of uranium annually, which analysts estimate could cost as much as $20 billion.

BHP also plans to spend $4.8 billion to expand its Pilbara iron ore production in west Australia by another 50 million tonnes from the second half of next year.

While no investment decisions on Australian projects were imminent, BHP Chief Executive Marius Kloppers said the introduction of the tax would mean BHP will be forced to pay twice as much tax in Australia than it paid in Canada, Brazil, China and other resource-heavy countries.

“The uncertainty is in place, it would be very difficult to approve any of those projects,” Kloppers told Australian Broadcasting Corp. television on Sunday.

Kloppers declined to forecast any direct impact of the tax on its operations while the tax had yet to be implemented.

“We are not going to come out, particularly when it is very uncertain, to make blanket statements about things that affect livelihoods, communities, employees and so on,” he said.

BHP acquired the Olympic Dam mine, the world’s fourth-largest copper deposit, when it bought WMC Resources in 2005 and immediately set out to increase output. An environmental study needed before expansion work can start is due for completion late next year.

“Obviously, we are getting very close to the end of that process... this new tax proposal does upset the apple cart there a little bit,” Kloppers said.

Olympic Dam currently holds capacity to yield 200,000 tonnes of copper and 4,000 tonnes of uranium each year.

Reporting by James Regan; Editing Ed Davies

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