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Australia: Global Financiers Are Fleeing, Says Forrest
Source: theaustralian.news.com.au
Source Date: Sunday, May 23, 2010
Country: Australia
Created: May 24, 2010

Global financiers are fleeing Australia due to the government's proposed 40 per cent tax on mining profits, Fortescue Metals boss Andrew Forrest says.

Mr Forrest, Australia's richest man, reiterated his criticism of the proposed tax as analysts continued to issue research saying Fortescue will be the hardest hit among miners.


“Global financiers are fleeing Australia, unfortunately,'' Mr Forrest told ABC TV.


“You can see that in the share prices of all Australian asset resource companies, you can see it in the share price of those companies with offshore assets.''


Australia's third largest iron ore miner last week put more than $17 billion worth of expansion projects on hold - its $US 9 billion ($10.5 billion) Solomon Hub and $US 6 billion ($7.02 billion) Western Hub in Western Australia's Pilbara region.

Bankers had pulled out of the projects after Macquarie downgraded the company's value in the Chichester Project by 20 per cent and the Solomon Project by 35 per cent, he said.

“Those severe downgrades of our value, it's the very reason why we knew that we couldn't continue our financing strategy with the Solomon project.''

Mr Forrest said he had also received an official note from a Chinese consulate saying clearly that Australia's competitive advantage to China was now gone.

Fortescue shares sank 22.97 per cent for the past week to $3.32 on the back of a 6.6 per cent drop in the overall market.

Mr Forrest said the resources sector had saved the country from a situation like Greece.

“It was the powerhouse which drove us through the global financial crisis,'' he said.

“It was that resources powerhouse that continued our ability to invest right throughout those down cycles.

“Now we don't have that ability to invest now.

“Quite simply those revenues needed to support future projects are gone.''

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