BHP Billiton Ltd. and Rio Tinto Group may join Xstrata Plc in reviving investment plans in Australia after forcing the government to water down a new tax on mining profits in the world's biggest exporter of coal and iron ore.

Prime Minister Julia Gillard agreed to cut the planned tax to 30 percent from 40 percent and raise the levy's trigger level, a week after ousting Kevin Rudd as the nation's leader to defuse a dispute that's damped the government's election prospects.

"The reduction in the headline rate is an amazing concession," said John Robinson, chairman of Global Mining Investments Ltd., which oversees about A$300 million ($254 million) of assets, including shares of BHP, Rio and Xstrata. "It's certainly better than I had expected."

Xstrata, which resumed work today on a copper project in Queensland state, BHP and Rio led the campaign against the initial tax proposal, which Moody's Investors Service estimated would have cut mining-company earnings by almost a third. Marius Kloppers, chief executive officer of BHP, said the new tax is a "material improvement" after earlier saying projects were difficult to approve under the original Rudd proposal.

Better Outcome

"There's no doubt the changes have moved in the direction of the miners," Chris Drew, an analyst at RBC Capital Markets, said today by telephone from Sydney. "It's a better outcome than the previous proposal. The impact of the tax is going to be lower, so profitability is going to improve."

David Fuller's view It looks to me as if a robust democratic process has forced this change on Australia's government and that the new Prime Minister Julia Gillard had the sense to compromise. Well done Australia.

What about the outlook for the big miners in today's global economic climate?

This correction has been difficult for the miners due to concern over economic slowdown and the Australian government's previous and cavalier attitude in changing the taxation policy. The chart patterns for BHP (weekly & daily), Rio (weekly & daily) and Xtrata (weekly & daily) are very similar and remain a concern. The best that can be said is that declines are overextended in the short term. It often pays to buy on weakness but the top characteristics would prevent me from doing so until the shares either become more of a bargain or show evidence of support building.