Mining shares rise after Australia supertax retreat

Mining shares have recovered after Australia’s new prime minister Julia Gillard announced she would water down plans for a new supertax on profits.

Mining companies such as BHP Billiton, Xstrata and Rio Tinto had threatened to cancel billions of dollars worth of contracts if the resource super profits tax was brought in. Their stand cost the previous prime minister, Kevin Rudd, his job in June.

The tax, to be introduced in July 2012, will generate A$1.5bn less than the original proposal. It will now only cover iron ore and coal extraction, which will be taxed at 30 per cent instead of 40 per cent on profits that exceed a 12 per cent rate of return rather than 6 per cent, as originally proposed.  

The Australian dollar rose 0.9 per cent against the US dollar after the concession was announced, and in London, BHP shares rose 0.9 per cent while Xstrata and Rio rose 1.1 per cent and 0.6 per cent respectively.

Read a full report at the Financial Times (registration required). ·