Rio Tinto has stepped up its attacks against the proposed new Federal mining tax.
It told shareholders in a letter that it is reviewing all its Australian projects under a worst-case tax scenario to assess the impact of the proposed mining tax on its future growth plans.
The letter was issued before a meeting the company and other big miners had with the government.
They emerged unhappy and in a joint press release said there were still major concerns unresolved.
BHP Billiton, Rio Tinto and Xstrata said the federal government is yet to indicate whether their key concerns with a proposed new tax will be addressed.
The miners said they had three fundamental areas of concern with the new tax.
These are: ensuring the RSPT is not applied retrospectively, the need for the effective tax rate to retain Australia’s global competitiveness, and for stability arrangements for tax and royalty arrangements.
Almost half Rio Tinto’s assets were in Australia, chairman Jan du Plessis said in a letter to shareholders yesterday.
This explained chief executive Tom Albanese’s recent description of Australia as his number one sovereign risk concern, Mr du Plessis said.
"Other countries will benefit as investment shifts from Australia to more attractive tax regimes," he said.
Chile, the world’s largest copper producer, on Tuesday joined Canada in saying the resources super profits tax was an opportunity for these nations to grab a greater share of the global minerals market.
Both countries however do not have any significant iron ore exposure. Canada has coking coal, but not enough to be a significant competitor.
Mr du Plessis reiterated Rio Tinto’s "grave concerns about the fundamentals of the new tax".
"It has been developed in a vacuum and is divorced from the day-to-day realities of business," he said.
"We are particularly concerned by the application of the tax to existing projects.
"The government’s proposal will penalise efficiency, discourage competitiveness, curtail investment and limit jobs growth," he said. "It has been developed in a vacuum and is divorced from the day-to-day realities of business."
He again said the company was keen to work positively with the Rudd government "on tax reform that would not damage Australia’s competitiveness, its mining industry or the superannuation funds of millions of Australians".
"The government’s current proposals, arrived at without consultation, have now significantly destabilised that investment framework…As a result, there has been a considerable increase in the perceived risk of investing in Australia, threatening to make Australia a much less attractive place in which to invest," the Rio chairman said.
Prime Minister Kevin Rudd on Tuesday rejected Rio Tinto’s claim that the government had not engaged in any consultation with the mining giant over the proposed new tax.
And Rio also revealed yesterday that it had received approval to build a $US469 million nickel and copper mine in the US.
The company said that construction of the Kennecott Eagle mine in Michigan’s Upper Peninsula will begin this year.
"Moving to the construction phase of Eagle is part of our strategy to increase investment in attractive growth projects in 2010," Andrew Harding, head of Rio’s copper division, said in yesterday’s statement.
"The long-term demand outlook remains strong for both nickel and copper and bringing Eagle on stream will give us greater benefit from that growth."
Rio said the construction of the new underground mine in Michigan, which is expected to begin production by late 2013, would go ahead after it received environmental approval.
The company said the new mine would be the only primary nickel mine in the US.
"Eagle will produce separate nickel and copper concentrates containing an average of 17,300 and 13,200 tonnes per year of nickel and copper metal respectively over six years," Rio said.
"Funding will enable construction of a new underground mine, associated surface facilities for servicing the mine, rehabilitation of an existing mill and development of a multi-use access road."
Rio shares rose $1.92 or more than 2.7% yesterday to $71.34.
