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Australian mining tax watered down to affect coal and iron ore only

In a huge win for the miners in Australia, in a statement announced overnight, the renamed Minerals Resource Rent Tax (MRRT) will apply only to iron ore and coal in Australia, and will be capped at 30 per cent rather than the original 40 per cent proposed. Oil and gas projects will come under the current Petroleum Resource Rent Tax (PRRT) regime to all Australian onshore and offshore oil and gas projects, including the North West Shelf.

Other commodities will not be included, which reduces the number of affected companies from 2,500 to around 320, the statement said. ''These commodities were not expected to pay significant amounts of resource rent tax, and excluding them will allow many companies to remain in their existing taxation regimes,'' the statement said.

The new "super profits" tax will only kick in when profit exceeds the long-term bond rate plus 7 per cent - compared with just the bond rate in the original reform announced by then-PM Kevin Rudd on May 2.

This is a huge win for the mining industry and represents a massive back-down on the original tax proposed by Kevin Rudd. It should provide more certainty, to risk capital as the rules are known and parameters better framed this time around.