Sunday, May 30, 2010 at 08:08PM
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.
“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.
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