Political punch-up as Olympic Dam stalls

Are the Government's carbon and mining taxes to blame for BHP slow down?
AUSTRALIA'S biggest resources companies have revealed that more than $50 billion worth of expansion projects have been mothballed, in an ominous sign that the peak of Australia's resources boom has passed.
In one of the biggest corporate decisions of the year, BHP Billiton has confirmed that plans for a $30 billion expansion of its Olympic Dam mine in South Australia and a $20 billion expansion of Western Australia's Port Hedland will not proceed.
BHP's bombshells came on the same day that Woodside Petroleum indicated that a long-held plan to spend $5 billion doubling the size of its Pluto gas project was on hold due to a failure to find enough gas off the WA coast.
BHP Billiton's iron ore loading facility in Port Hedland will not be expanded.
BHP Billiton's iron ore loading facility in Port Hedland will not be expanded. Photo: Reuters
While the three massive proposals have not been permanently axed, all appear unlikely to ever be developed, as slowing rates of growth in China drag commodity prices down from recent historic peaks.
BHP had been due to finalise approval for both projects before Christmas, but said yesterday that neither would be approved in the next 12 months, and that more time would be taken to investigate cheaper ways of developing them.
The Olympic Dam decision is a major milestone in the decline of the resources boom, as the project - seven years in the planning - would have been the biggest open cut mine in the world.
BHP chief executive Marius Kloppers blamed several factors for making the giant copper, gold, silver and uranium project less financially attractive: soaring construction costs, the high Australian dollar, sliding copper prices and the depressed outlook for uranium in the wake of the Fukushima disaster.
''It is the concept that we have been developing which is not viable given the current set of circumstance, particularly the capital cost of construction,'' he said.
The decision reignited debate in Canberra over the merits of the Gillard government's taxes on mining and carbon, both of which have been criticised by the resources industry. Olympic Dam's minerals are not affected by the mining tax - which is levied on profits from iron ore and coal sales - but opposition leader Tony Abbott said the new taxes were a factor in BHP's decision because they had trimmed the profits the company had available for new projects.
Mr Abbott last night admitted that he had not read yesterday's statements from BHP when laying some of the blame at the government's feet.
''The carbon tax and the mining tax mean there is no level playing field in Australia vis-a-vis elsewhere,'' he had said earlier.
Mr Abbott also blamed ''industrial militancy'' in the mining sector for making Australia a less inviting place to invest.
The attacks were not supported by Mr Kloppers, who stressed that the Federal and South Australian governments had given ''absolutely fantastic'' support to the Olympic Dam proposal in recent years.
Resources Minister Martin Ferguson said the government was disappointed at the decision, but he rejected links to the mining and carbon taxes.
''There's nothing more the South Australian and Australian governments could have done,'' Mr Ferguson said.
''Everything BHP Billiton wanted was given to BHP Billiton by the two governments over 12 months ago.''
Mr Ferguson has regularly claimed that Australia was poised to enjoy an ''investment pipeline'' of $270 billion worth of new resources projects, and he insisted he was confident in that claim despite yesterday's events.
The decision is a major blow to the South Australian economy, which had expected the Olympic Dam expansion to deliver a huge boost in jobs and a royalty stream of about $350 million per year for decades to come.
SA Premier Jay Weatherill said it was a ''major disappointment'' for BHP to again overlook the project.
Mr Kloppers expressed faith that the Chinese economy - which is increasingly the most important for the world and BHP - would show signs of improvement in the next six months.
With HENRIETTA COOK