Australian mining tax could be axed after PM is ousted
AUSTRALIAN Prime Minister Kevin Rudd stood down this morning after calling a surprise leadership ballot, throwing negotiations on a new mining supertax in the country into jeopardy.
Rudd’s deputy, Julia Gillard, will become Australia’s first female Prime Minister after Rudd resigned before the ballot of Labor party MPs at 9am local time (midnight BST).
Gillard commands strong support from left-wing members of the party, and has not been squeamish about confronting the mining industry in her role as employment minister.
The government has suffered falling approval ratings in recent months, and must call a general election before the end of the year.
UK mining shares pared earlier losses following Rudd’s unexpected call for a vote yesterday afternoon, in the hope that Rudd’s controversial 40 per cent resources super-profit tax would be scrapped or altered following the ballot.
Rio Tinto fell 1.6 per cent to £33.90, having earlier slumped 2.8 per cent. BHP Billiton, the world’s biggest mining firm, dropped 1.9 per cent to £19.51, after falling 2.5 per cent earlier in the day.
“Whilst it’s too early to predict a precise outcome, it has become increasingly clear that there is material opposition to the tax from within Rudd’s own party,” said Michael Rawlinson at Liberum Capital.
The super tax will apply from 2012 if adopted. Mining firms have lobbied ferociously for the levy to be scrapped, with Xstrata going as far as halting operations in the country until negotiations are concluded.