BHP heavyweight warns on perils of Grylls’ tax

BHP Billiton’s new asset president says Brendon Grylls’ proposed mining tax threatens to wipe out years of hard work and will have flow-on effects to Pilbara businesses big and small.

The comments from Edgar Basto came as the Australian mining industry last week declared war on the WA Nationals leader’s proposed $5 a tonne tax, and as Mr Basto visited Newman and Port Hedland to meet with staff to discuss concerns about the proposal.

“I think its important to say that we believe this is a really bad policy and it’s a bad policy for several reasons,” he said.

“One of those is if you want to promote development, if you want to promote more jobs, you don’t do it by impacting competitiveness for the industry.”

Mr Basto said BHP had paid on average $19-a-tonne in taxes in the past three years, adding the increase would see WA face the highest taxes in the world.

He said the increase would also come at a time when direct competitors in Brazil were significantly reducing freight costs and increasing their production and market share.

While the miner is working on finding ways to mitigate the impact of the tax if it comes in, Mr Basto said it would likely affect future projects and investment.

“It’s a big risk for us,” he said.

“We will have to look at our projects from an economic point of view.”

“(We will have to look at our) business case (and) whether we are good enough to continue and that will immediately have an effect because if we do not implement projects as we are planning, you know that will have an effect in terms of people and so on.”

In response to the launch of a campaign against the tax by the Chamber Minerals and Energy last week, Mr Grylls questioned the $19 a tonne figure.

“Until they have actually broken that number down, it is a bit of an irrelevant figure,” he said.

“If the CME want to publish figures for West Australians to see, they need to break those figures down to make it clear what West Australians receive.”

Mr Grylls said although he accepted the major miners paid taxes, he argued they could afford an increase to a 25¢ special lease rental that has never been increased.

Mr Basto countered that he was concerned that Mr Grylls was more worried about securing his own job, when the concept required more “long-term development”.

CME chief executive Reg Howard-Smith said the tax would place the WA iron ore industry in an uncompetitive position.