Australia's mining heavyweights are up in arms about the expected 40 per cent tax on their so-called "super" profits, which they warn could jeopardise jobs and projects.
Opposition leader Tony Abbott has lauched a new attack on the new tax, saying it will kill the mining industry.
Mr Abbott, who was in Adelaide at a mining services company, said everyday Australians were at risk of losing their livelihoods.
"(Prime Minister) Kevin Rudd does not have a plan for the economy, he has a plan to kill the mining boom stone dead," Mr Abbott told reporters on Friday.
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He ruled out supporting a watered-down version of the proposed new tax.
"I do not support great big new taxes on production, I don't support great big new taxes on jobs or great big new taxes on our cost of living," he said.
"This is a dagger aimed at the heart of Australia's posterity."
Qld mining projets shelved
His comments came after mining magnate Clive Palmer said he had shelved two big projects because of the federal government's proposed tax, including one which would have created 3000 jobs.
The Queensland billionaire and coalition backer has been a vocal critic of the federal government's proposal to tax mining profits by 40 per cent, saying it threatens to destroy the industry.
He says he has canned mining exploration plans in South Australia, while there will be no expansion of a billion-dollar iron ore project in the country's west.
That project would have delivered 3000 direct jobs and some $2 billion a year in exports, he estimated.
"There are (also) projects that we haven't announced that we've been planning that we have to stall on," Mr Palmer told ABC Television on Thursday.
The federal government has accused Mr Palmer - a major financial backer of the Liberal National Party in Queensland - of talking about projects that don't exist.
Mr Palmer was forced to admit his $6.5 billion mine project in Queensland's Galilee Basin will go ahead as planned, but said the tax would block any expansion works.
"We shouldn't be happy with a $6.5 billion project. We should want a $20 or a $30 billion project," he said.
He said he'd prefer a tax on the rich, like himself, rather than a tax that would have a roll-on effect for the whole of the country.
The profits tax has already dented Australia's reputation overseas, with South Africa and South America destined to benefit from the change, Mr Palmer argue
Government accused of lying
Fortescue Metals chief Andrew "Twiggy" Forrest, who has worked closely with the government on indigenous programs in the past, effectively accused the government of lying about the aims of the tax. And he suggested the move was the first step to nationalising the industry.
"We wouldn't all be here if Canberra had told the truth," Mr Forrest said.
"If Canberra had said this is a nationalisation of 40 per cent of the mining industry and the next step towards where the despotic economies go when they start nationalising industry, then this would not have attracted attention."
The comments won't surprise Mr Rudd, who already expected the battle to get murky.
"There is going to be a lot of crying wolf in the period ahead by a whole bunch of mining interests who don't want to see any change to their tax," Mr Rudd said.
"It will be a rough political period ahead on it, I know that." He expects an industry already close to the coalition to launch an aggressive campaign against Labor in the run up to the next federal election.
"I imagine that some in the mining industry will dig deep within their very deep pockets and seek to run a political campaign.
We will not be deterred one bit," Mr Rudd said. If things are looking tough for both the government and the industry, there is one party that's happy about the political turmoil - Canada.
Canadian PM invites miners to invest there
Canadian MP Brad Trost, who worked in the mining industry before entering politics, told ABC radio his homeland would welcome miners unhappy with the government plan to swipe a bigger slice of their profits.
"People are scared because their profits are going to go in taxes so they should come to Canada - a low-taxed, mining-friendly jurisdiction," he said. Mr Abbott believes there's a real chance investors will go elsewhere.
"It's the kind of thing that gives countries a reputation of not being able to be trusted, and that's the last thing Australia needs," he said. Industry participants, though, aren't completely clear about what it will mean.
Anglo-Australian miner Rio Tinto was forced to make a statement to the Australian Stock Exchange following reports it was planning to shelve billions of dollars worth of projects in response to the tax.
It confirmed no decision had been made on shelving projects but it was "reviewing the potential impact" of the proposed tax on operations and new projects in Australia.
Labor accused the company of using its shareholders as "playthings".
"We as a government don't care about companies having a shot at us - we're big enough to take it, and we're fair game in a free country," a government source said.
"But it's completely unacceptable when companies appear to be using their shareholders as playthings in a fight with the government."
