BHP move ignites new carbon tax stoush

THE Coalition said BHP Billiton's axing of its Olympic Dam mine expansion is evidence of the damage wrought by Labor's carbon and mining taxes.

Olympic Dam

THE Coalition said BHP Billiton's axing of its Olympic Dam mine expansion is evidence of the damage wrought by the Gillard government's carbon and mining taxes.

But Resources Minister Martin Ferguson said the blow to the $US30 billion copper and uranium project was “completely unrelated” to the taxes.

“This is a commercial decision, purely a commercial decision. It is no way related to any regulatory process in Australia,” Mr Ferguson said.

He said the mining tax was only applied to two commodities - coal and iron ore - neither of which were mined at Olympic dam.

But Tony Abbott said it was “absolute nonsense” to suggest BHP Billiton was immune from the taxes.

“BHP is Australia's largest iron ore producer; it's pretty close to being our largest coal producer, if not our largest coal producer,” the Opposition Leader said.

“The profitability of BHP is massively affected by the mining tax. The investment climate for BHP is massively affected by the mining tax.”

He said the government would axe the carbon and mining taxes to boost the chances of the resources industry attracting fresh investment.

A Coalition government would also re-establish the Australian Building and Construction Commission to stamp out bad behaviour by unions that raised project construction costs, Mr Abbott said.

Mr Ferguson said Australia was currently enjoying a $280 billion resources investment boom, and the Olympic Dam project would have been the “icing on the cake”.

However, the project was always going to be difficult because of its capital intensive nature and the rising cost of capital.

“New investment is going to be challenging for a variety of boards for some time to come,” he said.

ENDS