Fortescue launches last-ditch mining tax fight

The Federal Government is facing a last-minute legal challenge to its mining tax, with Fortescue Metals announcing this morning that it has formally begun proceedings in the High Court.

In a statement to the Australian Securities Exchange, the Perth-based company says it has received legal advice showing the legislation breaches the constitution.

"We believe we have a good case for challenging the MRRT (Minerals Resource Rent Tax) on constitutional grounds and we look forward to the resolution of these important issues by the High Court," the company's chief executive Nev Power said in a statement.

Mr Power says the tax discriminates against the states and restricts a state's ability to encourage mining.

The High Court challenge comes just over a week before the tax is due to take effect.

The Government is vowing to vigorously defend itself against the Fortescue Metals challenge, and is confident the legislation is constitutional.

"This challenge comes as no great surprise," a spokesman for Treasurer Wayne Swan said.

"Mr Forrest has made it clear that he is staunchly opposed to the Government spreading the benefits of the mining boom to millions of households and small businesses who aren't in the fast lane." But the company has rejected those suggestions.

"This legal case has got nothing to do with whether we will or won't pay, and the amount of MRRT that we will pay," Fortescue's director of strategy, Julian Tapp, told a media briefing.  "But I can say to you that we haven't changed our view that our payments in relation to this tax will be negligible in the early years.

" "We believe that all other mining companies are in the same boat.

"So this is clearly not about trying to reduce our tax liability, this is about attacking a law that we fundamentally believe is against the constitution." The Opposition believes a legal challenge to "Labor's dodgy mining tax" was inevitable, but Opposition Leader Tony Abbott says it is not for him to say whether it will succeed.

"I'm not a lawyer, I'm an alternative Prime Minister," Mr Abbott said.

"I can't say what can or should happen in the High Court, what I can and must say is that if we are elected we'll do the right thing by Australia and get rid of this bad tax." Prime Minister Julia Gillard renegotiated the original "super profits" mining tax proposal with mining giants BHP Billiton, Rio Tinto and Xstrata soon after taking over the Labor leadership.

This year's federal budget revised down the revenue forecasts from the tax to $13.4 billion over four years.

"The mining tax is a bad tax negotiated personally by Julia Gillard and Wayne Swan through a highly improper process," Shadow assistant treasurer Mathias Cormann said.

"They negotiated the design of a significant new tax on an important new industry exclusively and in secret with the three biggest mining companies." The founding chairman of Fortescue Metals, Andrew Forrest, has campaigned strongly against the tax, arguing it unfairly discriminates against smaller miners at the expense of the more established companies.

West Australian Premier Colin Barnett confirmed the state would not join the challenge but would appear as an interested party.

Mr Barnett says he does not believe a legal challenge will be successful, although he does think there are constitutional grounds for such a case.

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