The Australian Government has scrapped its plan for a "super profits tax" on resource companies and replaced it with a new scheme with a lower tax rate.
The move ends the stand-off with the industry by cutting the rate to 30% for the most profitable commodities, iron ore and coal.
Oil and gas projects including coal-seam gas will be part of the existing petroleum resource rent tax scheme, which is taxed at 40%.
Treasurer Wayne Swan says that the Government will lose more than $1 billion over four years but that it can still boost superannuation and cut company tax to 29% in four years' time.
The Government has also ditched the name of the "super profits tax", which will now be called the minerals resource rent tax and will affect just 320 companies instead of 2500.
Obstacle to early election removed
The agreement with the industry follows talks with Rio Tinto, Xstrata and BHP Billiton in Canberra this week and ends a row with the resources sector that contributed to the ousting of Kevin Rudd as Prime Minister.
The ABC reports that the agreement removes a key obstacle to new prime minister Julia Gillard's calling an early election.
Mining magnate Clive Palmer says however that he is still not happy about the tax: he says Ms Gillard failed to talk to him and other small-to-medium-sized mining companies before making her decision.
The federal Opposition says it remains committed to dumping the mining tax altogether.