Fortescue launches last-minute mining tax challenge

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 Stock 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." The Opposition believes a legal challenge to "Labor's dodgy mining tax" was inevitable.

"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." Prime Minister Julia Gillard renegotiated the original "super profits" mining tax proposal with mining giants BHP, 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 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.

Earlier this year, Western Australian Premier Colin Barnett said he did not think a legal challenge to the mining tax would be successful, although he does believe there are constitutional grounds for such a case.

"The Western Australian Government would consider participating in the High Court challenge by way of intervention," Mr Barnett said in a statement to the ABC this morning.

"This [is] in order to try to protect the ownership of the assets of the state-owned natural resources of Western Australia for Western Australians."

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