Wednesday, May 19, 2010

Fortescue To Review New Projects

Miner Blames Super Tax



Australian iron ore miner Fortescue Metals Group Ltd. has put two of its three expansion projects on hold.

The company has said that it wants to review the potential impact of the 40% tax on mining profits proposed by the Australian government. The tax is due to come into force in July 2012

Fortescue is to review its US9billion Solomon hub and its $6billion Western hub projects. Between them the two projects were set to employ up to 30,000 people.

"The uncertainty in the financial markets caused by the proposed tax and the cash impost that RSPT payments will place on future business revenues has necessitated an urgent review of the economics surrounding the development of Fortescue's major projects," the miner said in a statement on Wednesday.

The company had been aiming to approve Solomon next year but the only work to continue will be the completion of existing studies.

The project was slated to produce 160 million tonnes a year of iron ore.

However Fortescue continues to expand its Chichester hub capacity from 55 million tonnes to 95 million tonnes a year. Unlike the Solomon and Western projects, Chichester is to be financed from internal cash flows.

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