Andrew Forrest might have reclaimed the title of Australia’s richest man, but he is no mood to celebrate.
Instead, Forrest has appeared before a Senate hearing and slammed the Government’s restructured mining tax as unconstitutional, and demanded more consultation for smaller miners.
A recent surge in the share price of Forrest’s iron ore mining giant Fortescue Metals Group has seen the value of Forrest’s stake in the company surge by an incredible $1.6 billion since the start of October.
Forrest’s shareholding is now worth $6.6 billion, meaning he easily eclipses the $5 billion fortune held by Frank Lowy, who sat on top of BRW’s Rich 200 list when it was released in late May.
But while Forrest now has a dominant lead over his rivals on Australia’s rich ladder, he remains deeply unimpressed with the Government’s plan to introduce a mining tax on coal and iron ore suppliers.
In a sometimes heated appearance before a Senate Select Committee in Perth, Forrest said he was confident that the mining tax was unconstitutional and would be found to be so by the High Court.
However, he says that by the time the mining industry proves the tax is unconstitutional, the damage will be done.
“The problem Australians face is that by the time their government’s actions are proven to be unconstitutional in a court of law, commercially the horse will have bolted,” Forrest said.
“There’s no point having a Pyrrhic victory some years down the track when the mining industry is on its knees and new projects have dried up.”
Forrest also claimed former Prime Minister Kevin Rudd was close to completing a deal that would have been fairer to junior miners and claims he has been unable to get a meeting with new Prime Minster Julia Gillard to press his case for changing the tax.
“They (the big miners) have a hotline to the Prime Minister but we don’t have the number,” he said.
Fortescue says its effective tax rate under the mining tax would be between 38-45%, which Forrest says would make the company globally uncompetitive.
He also warned that global investors were already turning their backs on the Australian resources sector.
“People shouldn’t think for a moment that this has gone unnoticed overseas, where investors are already voting with their feet and backing new projects in Africa, Asia and the Americas rather than Australian start-ups.”
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
