A new tax plan proposed by Western Australia’s Nationals leader Brendon Grylls would add $5/t tax to iron ore.

Grylls, who emerged as the National’s leader after Terry Redman stepped down from the position, said the tax will help fix the state’s struggling finances while mining giants BHP Billiton and Rio Tinto have said it’s an “ill-conceived tax grab” that would hurt WA's economy, threaten local jobs and put the companies' growth at risk.

"There are no grounds for a new mining tax in Western Australia and it should not be adopted as Nationals policy," a Rio Tinto spokesman said.

The Sydney Morning Herald reported that the plan is expected to generate about $3 billion a year.

Rio Tinto was one of Australia's largest corporate taxpayers, had paid "record" royalties of almost $11 billion to the WA government since 2010 and employed close to 12,000 people in the state, argued the spokesman.

Meanwhile, a BHP Billiton spokesman said the company had paid $65 billion in taxes and royalties to Australia in 10 years, including $10.6 billion in royalties to the WA government.

"We do not understand why a proposal that is so discriminatory and uneconomic would be targeted at two companies," he said.
"Miners in Western Australia are operating in an international market and we have to be able to compete or will lose market share."