Investors running from doubt

STAWELL may be most famous for its footrace but it is a town built on gold.

STAWELL may be most famous for its footrace but it is a town built on gold.

It was founded in 1853, during the Victorian gold rush, and mining has been in operation in the area since that time.

The financial backbone of the 6000-strong town, the mine employs more than 350 staff and pumps $55 million into the local economy. But its long-term future has been under a cloud since the federal government announced its proposed 40 per cent tax on mining super profits.

The mine's operator, Canadian firm Northgate Minerals, says the mine's survival is dependant on constant reinvestment for exploration and projects.

And Kevin Rudd's tax on super profits, while not directly affecting the mine's earnings because of its size, has spooked investors. The company says many are rethinking whether they should invest in mining projects in Australia.

"Stawell Gold Mine has always required investment for the continuance of operations," mine manager Troy Cole told The Weekend Australian yesterday. "From a long-term perspective, it (the tax) will create a level of concern. These sorts of things start to deter investments."

Mr Cole, who has just returned from his company's annual general meeting in Canada, said many questions were being raised by North American investors about the impact of the tax.

"Everyone is in a point of doubt," he said. "And even a position of doubt creates uncertainty, and that can have an impact."

Northern Grampians Shire Mayor Kevin Erwin said the mine provided jobs and had a flow-on effect to shops, restaurants and the property market. "If this tax has any impact at all on the mine, that will have a significant impact on Stawell itself," Mr Erwin said.

Graeme Anyon, a former local councillor and school council president who set up the town's chamber of commerce, said Stawell would be devastated if the mine were scaled back or closed.

"A country town cannot afford to lose a business of that size and wealth generation," he said. "It would be a disaster."

Federal opposition finance spokesman Andrew Robb, who visited the mine yesterday, said the government did not realise the impact its tax would have on smaller mines in Victoria.

"It's a real dagger into the regional communities," he said. "These are towns with a heavy dependence on mines."

The Prime Minister said yesterday the new tax would provide better superannuation, tax cuts for businesses and investment in future infrastructure.