Miners dig in over tax

A group of Australian mining companies have ended a month-long truce with Prime Minister Julia Gillard, vowing to launch an advertising campaign against a resources profits tax before national polls.

The Association of Mining and Exploration Companies (AMEC), which represents small and medium-sized miners, said the decision was not politically motivated but driven by the tax's risk to investment and jobs.

"The Prime Minister said that the government was going to open the doors to the mining industry and asked the industry to do the same," chief executive Simon Bennison said.

"However, all that has happened is a secret deal has been done with three multi-national mining companies, to the exclusion of 99 percent of the industry."

The mining industry called a halt to its war-of-words with the government after Gillard ousted former leader Kevin Rudd, who had been unwilling to negotiate on the 40 percent tax rate, in a Labor Party room coup in late June.

The new prime minister then forged a deal with major firms BHP Billiton, Rio Tinto and Xstrata, agreeing to cut the headline rate to 30 percent and allowing it to kick in at a higher level and apply only to iron ore and coal.

But Bennison said little detail about the compromise had been announced and mid-cap miners and junior explorers were left concerned about the uncertainty surrounding the tax.

"As every day passes the level of uncertainty and confusion increases, with the result that Australia's economy, communities and families will be affected," Bennison said.

A renewed tax dispute could prove costly for Australia's first woman prime minister, particularly in the mining states of Queensland and Western Australia.

Opinion polls so far have Gillard winning the August 21 poll, with Tony Abbott's opposition Coalition needing a 2.3 percent swing to make Labor the first single-term government since World War II.