The Australian government announced Friday a reworked version of its planned new mining tax, featuring major concessions to the mining industry including a reduction in the headline rate of the tax to 30% from 40%.

The government has also excluded all commodities from the tax apart from iron ore and coal, easing industry fears about the potential impact on base metals projects.

While the deal marks a major backdown from the original proposal launched in May, the resolution of the heated dispute with the mining industry over the tax is a big win for new prime minister Julia Gillard and may pave the way for her to call a quick election.

Under the revised tax proposal, onshore oil and gas projects including the booming coal seam gas sector in Queensland state will be covered by the existing Petroleum Resource Rent tax, levied at 40%.

Iron ore and coal mines will be covered by a new Minerals Resource Rent Tax, or MRRT, to be levied at 30%.

In a major concession to the industry’s complaints over what they described as the retrospectivity of the tax, the government will allow companies to insert their mines into the new tax regime at market value rather than book value, thus allowing them to claim back against depreciation of the assets.

This will make a major difference to operations like the giant iron ore mines of BHP and Rio, which have been operating for decades and have book values written down well below market value.

The government backflip doesn’t completely remove the overhang of uncertainty on the sector, however, as the tax isn’t assured passage through parliament into law.

Australia’s main opposition Liberal-National coalition of center-right parties on Friday reiterated its vow to scrap the tax if it wins the next election.

‘We are going to oppose this tax because this tax from the Rudd-Gillard government is a bad tax for investment, it is a bad tax for jobs and it is ultimately a bad tax for Australia,’ Coalition Treasury spokesman Joe Hockey told Australian Broadcasting Corp. radio.

‘If this tax passes through the parliament, we will rescind it,’ he added.

Labor won a majority in the lower House of Representatives in a 2007 election. But it needs the Senate support of either the Coalition, or all seven minor party senators to pass any new laws.

The environmentalist Greens, who hold five of the seven balance-of-power seats, have also expressed reservations about the tax.

Under the revised MRRT proposal, investments made after July 1, 2012, can be written off immediately, rather than depreciated over a number of years, allowing miners to access deductions immediately.

The government said this meant a mining projects won’t pay any MRRT until it has made enough profit to pay off its upfront investment.

The new regime will also allow miners to transfer deductions from one mining project to another.

Some miners, including Fortescue Metals Group Ltd., had been unhappy with the way the changes to the tax were being carried out exclusively with the three big miners, with some worrying that their interests wouldn’t necessarily be represented by the majors.

In an effort to assuage these concerns, the government has set up a policy transition group led by Resources Minister Martin Ferguson and former BHP Chairman Don Argus to oversee the development of a more detailed technical design for the scheme.

Alex Wilson / Rachel Pannett