Mining giants Rio Tinto and BHP Billiton welcomed the Australian government’s decision to replace the proposed Resource Super Profits Tax with a Mineral Resource Rent Tax (MRRT).

Resolving the tax row with the powerful mining sector was one of newly-elected Australian leader Julia Gillard's first priorities.

A statement posted by BHP Billiton Chief Executive Officer, Marius Kloppers, on the diamond producer's website said that, "BHP Billiton believes that tax reform that is prospective, competitive, differentiated and resource-based will ensure that the Australian mining sector continues to grow through investment in the industry which benefits all Australians.

“We are encouraged that the MRRT design is closer to our frequently stated principles of sound tax reform, in that the proposed tax will be prospective in its treatment of profits from our iron ore and coal businesses, and not apply to the other commodities in our portfolio."

A corresponding statement by diamond mining giant Rio Tinto expressed a similar sentiment, saying the company has always maintained that "any tax reform proposal should not be applied retrospectively and must retain Australia's international competitiveness as an investment destination."

"We all want a minerals taxation system that grows the mining industry in Australia. A strong mining sector keeps the Australian economy strong, spreading prosperity to all Australians," said David Peever, Managing Director Rio Tinto Australia.

"The prime minister's announcement follows constructive discussions over the past week between the Government and mining companies. There is, however, still a lot of work to do. As one of Australia's biggest taxpayers, Rio Tinto is committed to working constructively with Government to ensure that the tax system continues to encourage investment in Australia."