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Mining companies happy with mining tax repeal

Sep. 02, 2014 11:48 AM ETRio Tinto Group (RIO) StockBHP, RIOBy: Carl Surran, SA News Editor
  • Australia's conservative government earlier today repealed an unpopular tax on mining company profits, fulfilling a pledge made during last year's national election and handing Prime Minister Abbott a political victory while pleasing the country's big mining companies.
  • Abbott believes the repeal, alongside the scrapping of the Labor Party's carbon tax in July, will convey to overseas investors that Australia would be more amenable to business interests.
  • "This will be a positive step for investment and good for jobs in the mining sector," Rio Tinto (RIO -0.2%) CEO Sam Walsh says.
  • The tax was complicated and focused on iron ore and coal miners of a certain profitability level but certain rules allowed miners to use prior capital spending as a tax deduction; BHP Billiton (BHP -0.5%) paid $200M in mining tax in FY 2013 and $24.8M in FY 2014, but it is believed all payments by Rio were refunded by the tax office.

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