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BIL
BIBLT
BIL - BHP Billiton Plc - Letter to BHP Billiton Shareholders
BHP Billiton Plc
Share Code: BIL
Share: GB0000566504
6 July 2010
Letter to BHP Billiton Shareholders
Dear Shareholder
The purpose of this letter is to report to you that on 2 July 2010, the Prime
Minister, Julia Gillard, announced the Australian Government`s decision to
replace the proposed Resource Super Profits Tax with a proposed Minerals
Resource Rent Tax (MRRT) on mined iron ore and coal. Key features are below:
* It applies only to iron ore and coal.
* It will be calculated on the profit of a mine, based on the value of the
resource at the `mine gate` less all costs to that point. It will not apply
to downstream processing or infrastructure.
* The rate of tax is 30 per cent.
* There is a 25 per cent `extraction allowance` that results in only 75 per
cent of otherwise taxable profits being subject to the MRRT.
* Any royalties paid to State governments are credited against any MRRT
liability, and the MRRT paid is itself a deductible expense for income tax
purposes.
* There is the option to have as the starting base the market value of the
project (not the previously proposed book value). This is particularly
important for our iron ore and coal operations which have been in existence
for many years.
* New expenditure is to be immediately deductible in full.
* Losses will be able to be transferred to offset profits such that only net
profits from projects are subject to the new tax. Any MRRT losses and/or
unused credits for State royalty payments will be able to be carried
forward at the Long Term Government Bond Rate plus 7 per cent.
Prime Minister Gillard also announced the establishment of a Policy Transition
Group led by former BHP Billiton Chairman, Don Argus AC, and Resources Minister
Martin Ferguson AM that will oversee the development of more detailed technical
design aspects. This Transition Group has the objective of ensuring the
announced tax becomes effective legislation in accordance with the proposed
design intent and in a commercial, practical manner.
As outlined in my previous letters, BHP Billiton believes tax reform that is
prospective, competitive, differentiated and resource-based will ensure
investment in the Australian mining industry is not discouraged and so continue
the growth of the industry in the interests of all Australians. At the request
of the Prime Minister, BHP Billiton representatives met with the Government last
week and there were constructive discussions that addressed these principles.
We are encouraged that the proposed MRRT is closer to meeting these principles
than the original Resource Super Profits Tax. We believe this decision to
replace the earlier proposed tax with a better designed tax proposal is
encouraging for the resources industry. A good foundation has now been
established on which an effective tax can be implemented.
There is still a great deal of detailed work to be done before this tax is
enacted and its impact is certain. We will work with the Government to ensure
that the final outcome of the minerals taxation proposal maintains the
international competitiveness of the Australian resources industry and is in the
long term interests of all Australians.
Australia has been at the foundation of BHP Billiton`s success for the last 125
years. We are proud of our presence in Australia particularly in the regional
communities and we are also proud of our ability to give Australians the
opportunity to show what we can do around the world. As a result, we have
helped Australia`s economic robustness and stability. This was particularly
relevant as we continued to invest through the tough times such as the recent
global financial crisis.
I will continue to keep you up to date on the progress of this important issue.
Thank you once again for taking the time to read this letter.
Yours sincerely
Jac Nasser AO
Chairman
BHP Billiton Limited ABN 49 BHP Billiton Plc Registration
004 028 077 number 3196209
Registered in Australia Registered in England and Wales
Registered Office: 180 Registered Office: Neathouse
Lonsdale Street Melbourne Place London SW1V 1BH United
Victoria 3000 Kingdom
The BHP Billiton Group is headquartered in Australia
Date: 06/07/2010 08:38:01 Produced by the JSE SENS Department.
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