Australia's main conservative Liberal-National opposition won't support the government's proposed 40% tax on the so-called "super profits" of the country's mining companies, Liberal leader Tony Abbott said Wednesday.

"I have made it very clear that I am deeply hostile to this great big new tax on the most efficient and the most competitive sector of our economy, the sector of our economy which above all else has helped us to survive the global financial crisis," Abbott told reporters.

"I can see no way that the (Liberal-National) coalition could support it."

Abbott met with senior executives of mining companies, including BHP Billiton Ltd. (BHP.AU) and Rio Tinto Ltd. (RIO.AU) in Canberra earlier Wednesday to discuss the tax proposal.

He didn't answer a question on whether the coalition would introduce new taxes on mining companies if elected to office.

But the remarks coincided with a reversal in mining stock prices, which had swooned in morning trading as a sell-off in commodities overnight compounded uncertainty about tax proposals introduced Sunday.

The S&P/ASX 300 Metals and Mining index closed slightly up on the day at 4140.9 compared to 4125.1 on Tuesday, having slipped as low as 4020.7 early in the day. The broader S&P/ASX 200 benchmark index closed down 1.3% at 4674.

One trader in Sydney said the turnaround in the market was prompted by Abbott's comments. His opposition to the proposals means "we are definitely going to get a watered-down version of the bill," he said.

Australia's Labor government doesn't control Canberra's Senate, and a poll Tuesday showed a rapid erosion in support for the government of Prime Minister Kevin Rudd amid a spate of rapid rises in interest rates.

Western Australian iron ore miner Cape Lambert Resources Ltd. (CFE.AU) was the first to blame the tax for a project cancellation on Tuesday when it said it would put development of a A$200 million iron ore project in the Pilbara region on hold as a result of the news.

The proposed Resource Super Profits Tax would see mining operations in Australia taxed at a rate of 40%, giving an effective tax rate of around 58% once other levies are factored in.

The government has defended the plans. Australia's Prime Minister Kevin Rudd traveled to the resource-rich Western Australia state Wednesday to begin the hard sell with mining executives.

Asked if there was any room for compromise, Rudd said the 40% rate is the right one.

"We think we've got that right actually," Rudd told Australian Broadcasting Corp. radio. "We need this super profits tax on our most profitable miners because a lot of their profits are heading overseas."

He acknowledged the plan was controversial, noting that in any move to increase taxes on industry "the bottom line is there's going to be controversy".

But Mitch Hooke, chief executive of the Minerals Council of Australia, an industry lobby group, warned of the risk of "Hanson-like xenophobia" in dismissing the national importance of companies such as BHP and Rio Tinto, which have been singled out by Rudd for "sending profits overseas".

Pauline Hanson led the anti-immigration One Nation party to several surprise electoral successes in the late 1990s.

"BHP Billiton's head office is in Melbourne, Rio Tinto has a major presence here," said Hooke. "Ask their Australian shareholders if they think these are foreign-owned companies or not, ask the communities where they employ people. This is not just a tax on the mining industry, this is a tax on all Australians."

Other countries have watched the developments closely. Canada's Finance Minister Jim Flaherty said Tuesday that Australia's policy change could be a huge competitive advantage for Canada, whose decline in corporate tax rates to 25% by 2012 would constitute a "great attraction for investment".

Rudd wants to use the additional revenue from the mining industry to fund a progressive reduction in Australia's company tax rate to 28%, from the current 30% rate, by the year starting July 1, 2014.

 
   -By Rachel Pannett and David Fickling, Dow Jones Newswires; +61 2 8272 4689; david.fickling@dowjones.com; 
   (David Rogers in Sydney and Monica Gutschi in Toronto contributed to this article)
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