The world’s two biggest mining companies, BHP Billiton and Rio Tinto , could face a $3 billion hit to their annual profits after a bizarre political upheaval in Western Australia (WA), home to their most profitable business units.
Brendon Grylls, a political maverick and emerging king-maker in WA, has proposed a special $5 per ton tax on the 600 million tons of iron ore produced annually by the two companies.
The possibility of a new tax is ringing alarm bells across Australian business and politics because it bears the hallmarks of a previous attempt to impose a special tax on profits earned by iron ore and coal miners.
A key difference with the tax mooted by Grylls is that it would only apply to BHP Billiton and Rio Tinto and not other iron ore miners such as Fortescue Metals Group and Hancock Prospecting which is controlled by Australia’s richest woman, Gina Rinehart.
Tax Designed To Plug A Budget Hole
There is no guarantee that the tax will ever be applied but Grylls used the appeal of an extra $3 billion in tax revenue to plug a hole in the State’s budget as a way to snatch control of the National Party in WA, and also used his new position to call for the resignation of the State’s Premier, Colin Barnett.
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