OneSteel Ltd. has raised concerns over the possibility of the proposed Resources Super Profits Tax’s negative effect on core mining and steel-making businesses.

Chairman Peter Smedley feared that the proposed tax will affect the competition in the mining and steel-making operations in New South Wales and South Australia.

In a letter to the shareholders, Smedley said that the communities in which the tax will be functional

The tax would have "serious implications" for the Company, its shareholders and the communities, in which it operates, shall not be imposed on those resources which are to be consumed internally.

OneSteel makes use of magnetite and hematite iron ore, dolomite and limestone for catering to its Whyalla steel works in South Australia.

"The impact for our employees would not be limited to the Whyalla business, but also have the potential to affect our Newcastle steel businesses, which are supplied with steel billet produced at the Whyalla steelworks", Smedley said.

He added that the RSPT will basically alter the economics of the Whyalla steelworks.

The magnetite iron ore is being currently sold to OneSteel at a reasonable price. However, the market price is higher under the rising demands for the bulk commodity.