FMG founder and chairman Andrew Forrest has long been a vocal opponent of the tax and its predecessor, the Resources Super Profits Tax.

Not surprisingly, FMG CEO Nev Power said he was disappointed by the High Court’s decision.

“Fortescue challenged the MRRT because it was an unreasonable intrusion into an area of state responsibility and that it was also an unfair, discriminatory and complex tax,” he said.

In very simple terms, a coal or iron ore miner’s MRRT liability equals the MRRT rate multiplied by the miner’s profit minus any MRRT allowances. State royalty payments are an MRRT allowance.

The court’s judgement pivoted on two questions.

The first was, is the Minerals Resource Rent Tax invalid? On this point FMG’s argument was the grounds the tax either discriminated between the states contrary to section 51 of the Australian Constitution; gave preference to one state over another contrary to s99 of the Constitution; or discriminated against the states or so placed a particularly disability or burden upon the operations or the activities of the states so as to be beyond the legislative power of the Commonwealth; or combinations of those points.

The second question was whether the tax was invalid in its application to the plaintiffs’ on the ground it is contrary to s91 of the Constitution.

The case was heard by the full bench of the court made up of chief justice Robert French, and justices Kenneth Hayne, Susan Crennan, Susan Kiefel, Virginia Bell, Stephen Gageler and Patrick Keane.

Section 51 of the constitution refers to the federal parliament’s ability to make laws, including those pertaining to tax.

Section 91 states: “Nothing in this Constitution prohibits a state from granting any aid to or bounty on mining for gold, silver, or other metals, nor from granting, with the consent of both Houses of the Parliament of the Commonwealth expressed by resolution, any aid to or bounty on the production or export of goods”.

Section 99 says: “The Commonwealth shall not, by any law or regulation of trade, commerce, or revenue, give preference to one State or any part thereof over another sate or any part thereof”

The plaintiffs argued the MRRT legislation contravened the limitation on the legislative power conferred in s51 because “in terms” the MRRT legislation imposed a tax payable at a different rate for each state by reference to the different royalty rates of the different states.

They argued that the legislation discriminated against low royalty states by imposing an equalising burden of tax on mining operations in those states.

In their reasons justices Hayne, Bell and Keane pointed to the “considerable irony in the circumstance that the plaintiffs’ argument that the allowance made for state royalties invalidates the MRRT legislation, would be obviated if the parliament had made no allowance for these outlays, when that is a course that might fairly be said to be unfair to taxpayers”

Power said FMG and the mining industry already paid more tax than other sectors, taking into account company tax and state royalties.

“Fortescue expects to pay $1.5 billion in company tax and royalties this financial year, rising to $2 billion in the year ahead,” he said.

FMG claims it has already incurred MRRT compliance costs of $3 million to $5 million.

Court costs were awarded costs against the plaintiffs.