Miners hope new PM will change plan

PERTH: Rio Tinto Group, the world's third-largest mining company, is "hopeful" the dispute over Australia's proposed mining tax will be resolved before the next federal election.

"I'm very hopeful that with the recent changes in the structure of the Government we can actually get in and engage and negotiate an arrangement," said Sam Walsh, the head of Rio's iron-ore operations. "We will support a proper tax reform."

The ruling Labor Party has dumped Kevin Rudd, the architect of the tax, for new Prime Minister Julia Gillard, who opened the door to talks on the proposed 40 per cent tax.

"We recognise tax regimes will be modified over time," Walsh said. "We're willing to take part in that process. What we will see is something that will enable projects to go ahead."

Treasurer Wayne Swan and Resources Minister Martin Ferguson would lead "genuine" talks with mining companies, Gillard said. Morgan Stanley estimates the tax, proposed to be levied on all profits above a 6 per cent return on investment on mining projects in Australia, would have taken A$85 billion ($104 billion) from the industry in the next decade.

Macarthur Coal, meanwhile, has called on Gillard to remove revenue from the proposed tax on resources from Budget forward estimates.

Macarthur chairman Keith De Lacy said that needed to take place in order to demonstrate good faith in negotiations with miners.

"It is not possible to negotiate in good faith with a big hairy monster like that looking over your shoulder," he said yesterday.

"Forward estimates should be the outcome of successful negotiations, not the starting point," he said.

Queensland Resources Council chief Michael Roche said the industry was "hopeful but not confident" of reaching an agreement with the Government over the tax.

But he said the industry remained cautious and would continue to work on its damaging public relations campaign, which would resume if the new talks failed.

"We're going to give peace a chance but if we find that nothing has really changed then the industry will quickly have to review its position," he said.

"In the meantime we keep on with our background work to be ready."

Roche said negotiations would need to include the two most contentious aspects of the tax - the across-the-board 40 per cent rate and its application to existing projects - on which Labor has previously refused to budge.

"At the moment there is no clear sign of what is capable of being negotiated, we will be all ears at these meetings."

He said Gillard's commitment to bring the Budget back into surplus by 2012-2013 did not preclude negotiations on the tax.

- BLOOMBERG, AAP