Source: www.miningweekly.com    Date: May 19, 2010

Rio Tinto CEO Tom Albanese entered the fray in the mining industry’s fight against the Australian government’s proposed 40% resources tax on super profits, by saying he was “shocked” by the proposal which was “akin to nationalization” of Australian resources companies. “We are not opposed to a tax reform, but [the reform] should protect against sovereign risk and improve industry competitiveness.” Other major diversified miners, including BHP Billiton and Xstrata, have also slammed the new tax.

“What the government is saying, is that they would like to be a partner, taking 40% of our pretax profits on our past, present and future investment. For good reason, people are beginning to use terms like nationalization and expropriation for this new partnership, and it will not help Australia’s future investment climate,” Mr. Albanese warned.

He has advised Rio Tinto’s portfolio managers to re-evaluate all new capital projects under a worst-case tax scenario. “Anything that reduces competitiveness and increases country risk will undoubtedly affect that country’s investment,” he added. “If the government had chosen to engage with us at first, before announcing what they did, they could have avoided the damage that has been done.”