Moody's said that the Australian government's proposed resource super profits tax would be broadly credit negative but unlikely to lead to credit downgrades for local resource companies.

Moody said that the effect of the proposed 40% tax would be neutral or would only exert a low to medium negative impact adding such effects would be containable within existing ranges. But it would introduce heightened uncertainty for some companies over the short to medium term.

The Australian mining industry argues that the tax would damage investment and eat away at cash flows for local miners which would potentially be negative for credit ratings.

Mr Tony Sage executive chairman of Cape Lambert Resources Ltd said that he was putting on hold the development of an iron ore project in Western Australia's Pilbara region as a result of the tax plans.

Mr Clive Palmer chairman of iron ore company Mineralogy Pty. Ltd told Australian Broadcasting Corp television that he would postpone two projects expected to bring in 3,000 jobs and AUD 2 billion worth of exports.

However, Mr Kevin Rudd PM of Australia has accused the industry of crying wolf over the changes and pointed to Sage's purchase of 1 million shares in Cape Lambert on Wednesday at a time when the company's shares had fallen as much as 24%.

Moody's argued that with the final shape of the tax still to be decided it was too early to assess the precise financial impact" but said it could have a material bearing on future investment decisions and lead to a re-evaluation of relative returns.

It said the credit impact would largely depend on the type of firm. Large diversified companies such as BHP Billiton Ltd, Rio Tinto Ltd and Xstrata PLC and upstream oil and gas companies such as Woodside Petroleum Ltd and Santos Ltd would see little impact.