The fate of a proposed mining tax in Australia, the world’s biggest exporter of coal and iron ore, remains in doubt after no clear winner emerged from the weekend’s election, heightening uncertainty for investors.

Australian prime minister Ms Julia Gillard and opposition leader Tony Abbott, 52, will need to broker deals with lawmakers to pass legislation after neither major party won enough seats to form a government in the 150 member House of Representatives.

Mr Abbott has vowed to scrap Labor’s proposed mining tax, which would levy a 30% levy on iron ore and coal producers such as BHP Billiton Ltd and Rio Tinto Group, while Greens leader Bob Brown whose party now looks to hold the balance of power in the upper house has said that he wants to renegotiate the tax to raise an extra AUD 2 billion.

Mr Peter Chilton a fund manager at Constellation Capital Management Ltd said that “If the Liberals were to form a government, there’s no mining tax. That’s potentially positive for the mining sector. If Labor forms an arrangement with the Greens, there’s more uncertainty.”

Mr Clive Palmer an Australian billionaire who shelved two mining projects in response to Labor’s initial tax proposal said that “I’m sure the mining tax cost Labor the election.”

While Independents Bob Katter, Robert Oakeshott and Tony Windsor are ex members of junior coalition partner, the Nationals, who traditionally draw support from rural Australia, they haven’t indicated which party they would back.

(Sourced from Bloomberg)