Bloomberg reported that talks starting next week on changes to Australia’s planned 30% mining tax will focus on when the levy should apply to iron ore production.

Mr Martin Ferguson resources minister of Australia said that “The question is at what stage in the production line the taxing point kicks in. This is the start of the process for negotiations.

Ms Julia Gillard PM of Australia who clinched a deal with independent lawmakers and a Greens Party member to form a minority government after her Labor Party lost its majority at the August 21 election, is yet to win their support for the levy in the world’s biggest shipper of iron ore. Laws intended to go to Parliament late next year will now be subject to negotiation with Gillard’s partners.

Mr Ferguson said that the government set up a committee, chaired by former BHP chairman Mr Don Argus to hold talks with the industry about how to implement the levy, including tax breaks for depreciation. The committee holds its first meeting on September 20 and may take until next year to complete its discussions.

He said that the government went to the election with a package that represented the outcome of detailed discussions as a compromise and regarded as fair outcome for all sides. I’m not seeking to have everything wrapped up by Christmas.

The Greens want the tax raised to the 40% levy on resources proposed by Ms Gillard’s predecessor, Mr Kevin Rudd and expanded to include uranium while independent lawmaker Mr Andrew Wilkie says the watered down levy is unsatisfactory. Ms Gillard pledged in July to set the lower levy that only applies to iron ore and coal in a deal signed with BHP Billiton Limited, Rio Tinto Group and Xstrata Plc after talks that excluded smaller miners.

Mr Ferguson said that from an industry perspective there’s a desire to resolve some of these issues of principles sooner rather than later. Mr Don Argus and I will be seeking to discuss the work plan with the transition committee and get on with the job.

He said that whether the levy applies to the raw resource or value added by the miner is important in an industry such as magnetite, where the resource is processed into pellets used for steel. Changing the rate and expanding the levy to other commodities won’t happen.

(Sourced from Bloomberg)