Kevin Rudd remains confident his government's proposed super-profits tax on mining companies is the right policy despite a mining giant shelving expansion of two Queensland projects.
The Anglo-Swiss Xstrata indicated on Thursday it would suspend expansion worth about $586 million because of uncertainty created by the tax.
"The government is confident of its argument (for the tax)," the prime minister told the Seven Network on Friday.
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'Remarkable' assertion
"You should take what very big mining companies have to say in this big debate ... with a bit of a grain of salt."
Mr Rudd described as "remarkable" an assertion by Xstrata boss Mick Davis that his company was paying too much tax.
"I don't know anyone in Australia who would accept that," he said, adding Xstrata campaigned "vigorously" for the retention of Work Choices and Australian Workplace Agreements.
The opposition says capital is fleeing because mining company confidence in future investments has been "shattered".
Macfarlane sells shares
Opposition resources spokesman Ian Macfarlane used a decision by global fund manager JP Morgan Chase and Co to sell a quarter of its holding in BHP Billiton and Rio Tinto, because of concerns about the tax, to back his claim about "a flight of capital" out of Australia.
"These are people who have to make impartial decision about the future investment prospects of their investment fund holders," he told ABC Radio.
"The confidence in establishing future mining operations in Australia is shattered."
Mr Macfarlane said miners were saying the proposed tax meant they would be paying more in Australia than in Brazil, Chile and Peru and "double Canada".
Xstrata mine 'marginal'
"They will simply get a far better return and in fact struggle to reach their basic hurdle rate in future projects in Australia."
Resources Minister Martin Ferguson suggested Xstrata made its decision because one of its mines was marginal.
"We are going to get this on a drip, drip basis day by day by day," he told ABC Radio.
"It's all about pressure on government to back down from fronting up to a national interest debate."
