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« Sven Del Pozzo: Ban BP but don’t Expect Offshore Ban | Main | Why Google Should Subscribe to Casey Research »

Rio Chief says Tax Man is now His `Silent Partner’

Rio Tinto Rossing Uranium 31 May 2010.jpg
Rio Tinto Rossing Uranium 31 May 2010

Its an interesting take on the proposed new mining super profits tax in Australia by the CEO, Tom Albanese, who is of the opinion that the tax has damaged the nation's reputation overseas and added to sovereign risk, according to a news release by Bloomberg.

Rio Tinto Group, the world’s third- largest mining company, said as much as half its balance sheet is threatened by Australia’s plan to boost taxes on resources producers.

The complexity of the proposal for a 40 percent super profits tax on resource companies makes it difficult to assess its costs precisely, Tom Albanese, Rio’s chief executive officer, said in an interview broadcast yesterday on ABC’s “Inside Business.” He said it may amount to more than 50 percent.

“This is half our balance sheet at risk because we have someone now coming in to say, ‘I want to be your silent partner. I want 40 percent of your pretax profits and largely written-off assets,’” Albanese said. The tax has damaged Australia’s reputation overseas and added to sovereign risk, he said.

The government set aside A$38.5 million ($32.6 million) in its May 11 budget to promote an overhaul of the nation’s tax system, including the resources levy. Mining companies oppose the tax, scheduled to take effect in 2012, and have placed full- page advertisements in Australian newspapers to lobby for changes.

Last week, the government said it will run its own advertising campaign to counter the “misinformation.” Treasurer Wayne Swan said in an e-mailed statement yesterday that the super profits tax, or RSPT, wouldn’t be retroactive.

‘Misleading’ Claims

“There has been much comment from mining companies in recent weeks about the supposed ‘retrospectivity’ of the RSPT,” Swan said. “These claims are clearly misleading, as the RSPT will apply to mining profits from 1 July 2012. It does not apply to past profits.”

Rio’s CEO said it was important to reconsider the proposal and that he’s ready to work with Prime Minister Kevin Rudd’s government on a fundamentally different approach. The world’s third-largest mining company is already paying almost 35 percent tax plus royalties, and will publish independently audited data on its tax payments later in the week, he said.

“Albanese left no doubt he’s willing to engage on a long- term, workable solution, arguably a process companies like Rio should have been involved in before the tax was announced,” said Tim Schroeders, a fund manager at Pengana Capital Ltd. in Melbourne.

To read the article in full please click here.

Have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

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Accumulated Profits from Investing $1000 in each OPTIONTRADE signal 14 May 2010.jpg

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Reader Comments (1)

Thanks for this article - I am surprised you have not had a comment yet from downunder - perhaps many are stunned and counting losses - well I can be first to comment. I have already spoken on this subject at my climate blog.
Harming the Australian economy 101
#2 Harming the Australian economy 101
#3 Harming the Australian economy 101
We must remember this new tax was dreamt up by our Treasury Secretary Ken Henry and his findings were in Govt hands early this year. But the politicians sat on the new scheme for near 4 months - that tells us something. Then they release this "cunning new plan" in the midst of global turmoil over EuroLand debts. Brilliant timing. Shows zero understanding of how sensitive market sentiment can be - I am sure big international players just noted - Oh Australia is harming one of the main sectors of its economy - OK we sell Australia. Simple.

I would appreciate somebody emailing me a time series of daily closing prices for Canadian and or South African resource stock indices - from start 2010 would be fine. Please make file in column text or Excel97, no Vista or later files like docx please and I use Windows not Mac. Thanks if someone can help.
sanur2007 at sign

June 1, 2010 | Unregistered CommenterWarwick Hughes

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