Rio Tinto chief executive Tom Albanese has linked the Rudd government's proposed super tax on mining
profits with the sharp fall in the Australian dollar.
RIO Tinto chief executive Tom Albanese said today the Rudd government's proposed super tax on mining profits was its biggest sovereign risk and the uncertainty over the tax had hurt the Australian dollar.
His attack on the tax came as rival BHP Billiton continued its campaign against the tax, hitting back at claims by Treasurer Wayne Swan that the company only paid a tax rate of about 13 per cent.
Mr Swan and Julia Gillard yesterday quoted research conducted at the University of North Carolina as evidence that mining companies pay around 13-17 per cent tax after various concessions.
"It concerns BHP Billiton that inappropriate conclusions appear to have been drawn from a study by two academics from a United States university," BHP chief financial officer Alex Vanselow said.
"The 2009 earnings of BHP Billiton's Australian operations were almost fully reinvested back in Australia in the form of taxes, royalties, capital applied to new and existing projects and dividends to shareholders."
Mr Albanese at Rio Tinto warned that the mining tax was the biggest sovereign risk facing the miner anywhere in the world.
"From my own perspective, this is my number one sovereign risk issue on a global basis," he said.
Mr Albanese warned that companies would increasingly look abroad to develop mining projects, citing the example of Canada, which also has rich mineral deposits and a strong regulatory framework.
"By the way, the Canadian dollar has not fallen nearly as hard as the Australian dollar," he said.
Mr Albanese flew into Australia over the weekend for Rio's Australian annual general meeting in Melbourne, which is scheduled for Wednesday.
Rio iron ore boss and chief executive for Australia Sam Walsh said the uncertainty over the tax proposal was delaying investment decisions.
But neither he, nor Mr Albanese, would list any that would be delayed.
"The problem we have is, until we have certainty as to how this tax is going to be calculated, what it actually is, it actually makes it very difficult to make decisions," Mr Walsh said.
He pointed out that after the consultation period, there would be a federal election and then a further wait before it was legislated.
"We are facing an extended period of uncertainty here and that in itself is a bad thing in that it is delaying projects," he said.
Mr Albanese said the new tax did not hurt the case for the proposed $US116 billion ($141bn) tie-up of its iron ore operations with that of BHP Billiton, saying that the $US10bn-plus in expected synergies were more important than ever.
He again rejected government claims the tax would have reaped an extra $35bn in tax if it was put in a decade ago, saying Rio's investments in the Pilbara would not have been as great had the tax been in place earlier.
The government was widely expected to make changes to the proposal, with Resources Minister Martin Ferguson saying yesterday that there were refinements that could be made to make the tax more appropriate and balanced from a mining point of view.
But he said the headline rate was going to be 40 per cent.
Mr Swan also added to the debate over the tax rate miner's pay, saying that companies were acting "hysterically" by exaggerating the amount they would pay under the new proposal.
"Miners have access to a range of generous deductions, which means that they are paying well below the official (corporate tax rate) of 30 cents in the dollar. So those companies are not telling the truth," Mr Swan told ABC Radio.
His comments came as the resources industry said it was willing to negotiate over the resources tax with the federal government, as it was flagged that amendments to the controversial proposal were likely to be made.
Woodside Petroleum chief executive Don Voelte said today that the industry was ready to negotiate a different tax and wanted to give a fair share back to Australians.
"The key is how you balance the right amount of money back to the citizens, versus the economic return on billions and billions of dollars of investment," Mr Voelte told ABC Radio today.
"People keep saying those are our resources but those resources aren't worth anything in the ground, it takes billions of dollars by those companies at great risk."
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