Mining Investment Risk Rising in Australia: "Resource Super Profits Tax" Debate Heats Up

The political debate in Australia over the government's proposed "resources super profits tax" is now well underway.

As characterized recently in the Financial Times ("Australian super tax increases investment risk," June 3, 2010), "The proposition...is for mining companies to take on 100 percent of the costs and risks associated with their investments but pay more than 50 percent of the gain to the government." Anyone interested in the intersection of nation state tax and resource policy with mining company investment decisions should read the article.

Australian Prime Minister Kevin Rudd has argued that such a tax would be fairer to the Australian people. On the other hand, the major mining companies operating in the country are uniformly against it.

Does this portend a more difficult investment environment for mining companies? One way to look at it is that if Australia can do this, then anyone can (and may).