Canberra, 3 May 2010

Australia's government girded on Monday for a battle with global miners over its plan to slap the industry with a new 40% profits tax, after two home-grown mining giants said the move would threaten investment. Anglo-Australian miners Rio Tinto and BHP Billiton say the new tax, announced on Sunday, would jeopardise investment in the nation's biggest export sector and make it the world's most heavily taxed mining industry.

But the centre-left government, which has made the tax a centerpiece of its re-election agenda this year, defended the move on Monday, stressing that the new tax would simply replace existing mining royalties charged by state governments.

Australian Treasurer Wayne Swan also said some of the money raised from the new tax would be ploughed back into generous tax breaks for mining exploration and noted that miners would also benefit from a planned cut in corporate tax.

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