UPDATE 1-Rio Tinto to Re-evaluate New Australian Projects-Shanghai Metals Market

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UPDATE 1-Rio Tinto to Re-evaluate New Australian Projects

Industry News 05:14:12PM May 12, 2010 Source:SMM

SYDNEY, May 12 (Reuters) - Rio Tinto (RIO.AX) (RIO.L) Chief Executive Tom Albanese has hit out at the Australian government over a new tax proposal on mining profits, ordering a review of new investments in the country.

Global miner Rio Tinto has yet to approve a $116 billion merger of its iron ore operations in Australia with BHP Billiton (BHP.AX) (BLT.L) and separately is assessing an expansion project in iron ore costing more than $10 billion.

In his first public comments since Australian Prime Minister Kevin Rudd proposed a 40 percent "super profits" levy on miners 10 days ago, Albanese said the action was arbitrary in nature and smacked of "nationalisation and expropriation" of private assets by the government.

I've already asked our managers to re-evaluate all new capital projects under worst case tax scenario," Albanese said while attending conference in the United States, according to a transcript provided by the company.

"Anything that reduces competitiveness and increases country risk will undoubtedly affect that country's investment," Albanese said.

If the tax is implemented in its present form in 2012 as planned, Australia risked an industry-wide "derating" of the mining sector, he said.

"Of course, for Rio Tinto we will continue to invest in Australia but on different terms and under different risks," Albanese said.

"Anything that reduces competitiveness and increases country risk will undoubtedly affect that country's investment," he said.

Rio Tinto last week was forced to clarify that none its projects had been shelved so far over the tax in a statement to the Australian Stock Exchange after its iron ore division chief said the company's projects had been put on hold.[ID:nSGE6440MK] Since then, the ASX has taken the rare step of demanding miners tone down their outrage in statements critical of the tax.

Albanese's comments, however were not released to the exchange, but directly to media.

Rudd has so far resisted making concessions over the levy on profits to help fund social programmes. He has labeled the actions by miners as scare-mongering, saying Australians deserved to benefit more from the global recovery in commodities markets powering the national economy.

"For good reason, people are beginning to use terms like nationalisation and expropriation... And this will not help Australia's future investment climate," Albanese said.

BHP Billiton Chief Executive Marius Kloppers has already warned that approving key expansion projects would be difficult given the new tax, while Xstrata (XTA.L) has suspended A$30 million in new exploration work.

Kloppers in a television interview on Sunday said he expected the tax to proceed with few changes, forcing BHP and other miners too pay twice as much tax in Australia than paid in Canada, Brazil, China and other resource-heavy countries. Mining companies in Australia have been racing to boost production for everything from iron ore and coal to copper and bauxite to feed the recovery in global industrial markets.

Iron ore sells for more than twice last year's price and coal for steel making is up 55 percent.
 

UPDATE 1-Rio Tinto to Re-evaluate New Australian Projects

Industry News 05:14:12PM May 12, 2010 Source:SMM

SYDNEY, May 12 (Reuters) - Rio Tinto (RIO.AX) (RIO.L) Chief Executive Tom Albanese has hit out at the Australian government over a new tax proposal on mining profits, ordering a review of new investments in the country.

Global miner Rio Tinto has yet to approve a $116 billion merger of its iron ore operations in Australia with BHP Billiton (BHP.AX) (BLT.L) and separately is assessing an expansion project in iron ore costing more than $10 billion.

In his first public comments since Australian Prime Minister Kevin Rudd proposed a 40 percent "super profits" levy on miners 10 days ago, Albanese said the action was arbitrary in nature and smacked of "nationalisation and expropriation" of private assets by the government.

I've already asked our managers to re-evaluate all new capital projects under worst case tax scenario," Albanese said while attending conference in the United States, according to a transcript provided by the company.

"Anything that reduces competitiveness and increases country risk will undoubtedly affect that country's investment," Albanese said.

If the tax is implemented in its present form in 2012 as planned, Australia risked an industry-wide "derating" of the mining sector, he said.

"Of course, for Rio Tinto we will continue to invest in Australia but on different terms and under different risks," Albanese said.

"Anything that reduces competitiveness and increases country risk will undoubtedly affect that country's investment," he said.

Rio Tinto last week was forced to clarify that none its projects had been shelved so far over the tax in a statement to the Australian Stock Exchange after its iron ore division chief said the company's projects had been put on hold.[ID:nSGE6440MK] Since then, the ASX has taken the rare step of demanding miners tone down their outrage in statements critical of the tax.

Albanese's comments, however were not released to the exchange, but directly to media.

Rudd has so far resisted making concessions over the levy on profits to help fund social programmes. He has labeled the actions by miners as scare-mongering, saying Australians deserved to benefit more from the global recovery in commodities markets powering the national economy.

"For good reason, people are beginning to use terms like nationalisation and expropriation... And this will not help Australia's future investment climate," Albanese said.

BHP Billiton Chief Executive Marius Kloppers has already warned that approving key expansion projects would be difficult given the new tax, while Xstrata (XTA.L) has suspended A$30 million in new exploration work.

Kloppers in a television interview on Sunday said he expected the tax to proceed with few changes, forcing BHP and other miners too pay twice as much tax in Australia than paid in Canada, Brazil, China and other resource-heavy countries. Mining companies in Australia have been racing to boost production for everything from iron ore and coal to copper and bauxite to feed the recovery in global industrial markets.

Iron ore sells for more than twice last year's price and coal for steel making is up 55 percent.