Fortescue volunteers iron ore giants to massively scale back diesel rebates and cover $2.5b fuel relief bill

Fortescue is urging big miners to help plug a $2.5 billion fuel excise hole in the Federal Government’s Budget by capping the amount they can claim in diesel subsidies.

In a move likely to prove controversial among fellow Pilbara miners, Fortescue has proposed a $50 million limit on the amount of fuel tax credits that can be claimed each year by Australia’s biggest diesel-guzzling companies.

The proposal from the Andrew Forrest-chaired miner comes on the same day the Government’s halved fuel excise cut takes effect.

The three-month reprieve is an attempt by Prime Minister Anthony Albanese to shield consumers from soaring petrol and diesel prices, however there are concerns it may be a slow release as fuel retailers first look to shift stock that has already been taxed.

Fortescue’s suggested fuel credit reform would likely only need to apply to the top 15 diesel consuming miners, leaving small businesses and farmers still able to claim their credits — which are likely to be far lower — as normal.

The miner’s iron ore chief Dino Otranto billed the reform as a “practical, ready-to-implement solution”.

“This is a smarter way to provide cost-of-living relief, ensuring taxpayer funds are used efficiently rather than continuing to subsidise diesel use for a small number of large companies, which comes at a significant cost to the Budget and does little to address Australia’s long-term energy challenges,” Mr Otranto said.

“Our proposal is targeted and practical, capping excessive rebates for the largest users and redirecting that funding to better support both the Budget and the energy transition.

“It would affect only a small number of the biggest mining and freight operators, while leaving farmers, small businesses and everyday Australians untouched.”

Fortescue claims the change could generate savings of up to $2.2b a year.

The mining industry’s case for the fuel tax rebate largely stems from its longstanding position that it shouldn’t pay taxes on roads it doesn’t use — an argument originally pushed by farmers — and on the premise that many miners have to build their own access roads to get to site.

WA’s iron ore miners are all pushing to make headway in electrifying their diesel fleets, a key hurdle in reaching emissions reduction targets.

Conflict in the Middle East and a blockade in the Strait of Hormuz made diesel supplies and ensuring mining operations keep producing, a more pressing and imminent issue.