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Miners see light at end of 'super tax' tunnel

2010-05-11 09:55

BEIJING: China's largest iron ore trader Sinosteel and China's fourth-largest steelmaker Anshan Iron and Steel Corp said they are willing to continue to invest in Australia, although that nation's "super tax" will definitely affect the companies' earnings.

"We are reviewing how the tax will impact our companies, and undoubtedly, it will affect costs and profits in our local projects," said Sinosteel president Huang Tianwen on Monday at a conference in Beijing.

"But from a long-term perspective we are still committed to exploring more overseas resources."

Bai Jingpu, vice-president of Anshan Steel, also said the company is evaluating and analyzing the impact of a 40-percent tax on the Australian mining industry, but the company will continue to invest in the country.

He also said his company is talking with an American steel company on cooperation but didn't reveal any details on the project.

Their comments come at a time when the new resource tax has triggered worries in the Australian mining industry. The "super tax" plan was released last week and is expected to start in July 2012. Some Australian mining companies are worried the move will make the nation's mining assets less attractive.

Both Sinosteel and Anshan Steel have projects in Australia.

Sinosteel paid A$1.4 billion ($1.27 billion) in Australian iron ore company Midwest in 2008 and is developing a mine there. Anshan steel is cooperating with Ginadalbie Metals Ltd to develop the Karara iron ore in western Australia.

Chinese companies have long wanted to invest in overseas resources to secure raw material supplies and sealed several merger and acquisition deals in Australia last year.

The latest move is PetroChina and Shell's A$3.5 billion bid for the acquisition of Arrow Energy Limited approved by the Australian government last month, followed by private company Hanlong Mining Investment's A$200 million for a 55 percent stake in Australian miner Moly Mines.

The rising cost of raw materials is also spurring Chinese companies to accelerate the pace of overseas mining acquisitions.

Xu Lejiang, the chairman of Baosteel Group, China's largest steelmaker, said on Sunday that the rising price of iron ore will stimulate Chinese enterprises to acquire overseas mines and accelerate domestic ore exploration.

Iron ore imports by China, the largest buyer in the world, grew 11.6 percent in the first four months of 2010 from the previous year, according to data from the Customs office.

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