Fortescue boss Andrew Forrest halts mining projects as super profits tax cuts his fortune by $740 million

Fortescue Metals Group founder and chairman Andrew Forrest has announced his company will halt two of its three main expansion projects due to uncertainty surrounding the Resources Super Profits Tax.

Fortescue told the Australian Stock Exchange that the company’s $US9 billion Solomon Hub expansion project, which it says would have created 21,000 jobs, has been placed on hold, as has the $US6 billion Western Hub expansion, which was projected to create 10,000 jobs.

“The uncertainty in the financial markets caused by the proposed tax and the cash impost that RSPT payments will place on future business revenues has necessitated an urgent review of the economics surrounding the development of Fortescue’s major projects,” the company said in this morning’s statement to the ASX.

“Fortescue will continue to monitor the progress of debate and consultation on the RSPT. However, the company review of the economics surrounding project development and the subsequent decision to place the Solomon and Western Hub developments on hold as a result, has confirmed to Fortescue that the RSPT is poorly designed and will significantly reduce mining investment and the subsequent jobs that are created.”

Fortescue’s shares have fallen 3.2% in morning trade following the announcement, and have now fallen from $4.58 before the super profits tax was announced as part of the Government’s response to the Henry Tax Review, to around $3.82 this morning.

No mining executive has been hit as hard as Andrew Forrest, who was named as Australia’s richest man earlier this year by Forbes magazine.

The value of his personal stake in Fortescue has now dropped a staggering $740 million from $4.46 billion to $3.72 million since the new tax was announced.

Fortescue is the latest in a string of mining companies who have said they are reassessing various projects in light of the new tax.

However, the architect of the tax, Ken Henry, defended the tax yesterday and said the Government should not give in on a push to change key parts of the tax to lower the Government’s take.