Mining giants slam Australia's 'high' taxes, costs and currency

Three of the world's biggest miners have warned that government taxes, high costs and a strong currency are putting pressure on their Australian operations, reports said Monday, as they battle falling commodity prices owing to a supply glut. Heavyweights BHP Billiton and Rio Tinto said the high costs were placing a "vice-like grip" on the coal industry and could lead to more mine closures and job cuts, The Australian Financial Review reported. Their warnings came as the world's biggest aluminium producer, Russia's Rusal, said that domestic investment conditions in the sector were "extraordinarily difficult". The Australian mining sector has been going through a period of belt tightening, winding back or shutting operations and slashing thousands of jobs as the Asia-led mining investment boom cools. Swiss giant Glencore Xstrata said last week it would close its Newlands underground coal mine in central Queensland state with the loss of almost 200 jobs by the end of 2015, adding to previous cuts in 2013. The slide in coal prices also saw Integra, a subsidiary of Brazilian mining powerhouse Vale, announce in mid-May a suspension of work at two mines in New South Wales. Rio's chief executive for energy Harry Kenyon-Slaney said his company's leadership team was "prepared to kill sacred cows", such as freezing salary rises as part of its cost-cutting drive. "Quite a lot of projects that had considerable noise around them over (the) last three or four years have gone quiet," he told the Financial Review. "The economic reality is that it is going to be quite hard to find financing for big coal projects." Rusal said Australia's high cost of construction and a stubbornly high exchange rate were putting future investment at risk. "The industry in Australia is faced with development hurdles that pose significant obstacles for investment," Rusal's Australian chairman John Hannagan told The Australian broadsheet. He added that frustration with Australia's investment climate had prompted the firm to turn its attention to Indonesia, where it is looking into bauxite and alumina opportunities despite the country's recent ban on exporting unprocessed bauxite. "While there is still some uncertainty around aspects of the new policy we would expect greater clarity after the 2014 Indonesian elections are completed," said Hannagan. Indonesia holds its presidential election in July. "This new development means that Australia will compete directly with Indonesia as their bauxite/alumina policy matures."