Rio Tinto (ASX:RIO) Yet to Decide Whether to Shelve Iron Ore Projects

Sydney, May 7, 2010 AEST (ABN Newswire) - Rio Tinto (ASX:RIO) confirmed it is reviewing the potential impact of Australian government's proposed Resource Super Profits Tax (RSPT) on all of its operations and new projects in Australia, but no decision has been made to shelve any projects in Australia.

Rio's statement followed a news report saying it planned to shelve A$11 billion in spending on expanding its Western Australian iron ore operations. The Federal Government on Sunday released the Henry Tax Review which includes plans to introduce the RSPT on mining profits above a certain threshold. A 40 per cent tax will be imposed on profits made from non-renewable resources from July 1, 2012. The new proposed tax could provide funding for new infrastructure and wider Australian community.

The government's announcement led to a sharp sell-off in Australian mining shares with Rio Tinto among the miners hardest hit.

Rio Tinto said it was not opposed to tax reform, but concerned about the new resource tax, saying taxing 40 per cent of profits over the long-term bond rate, together with corporation tax, would make the Australian minerals sector the highest taxed in the world. This could seriously erode competitiveness, curtail investment and limit jobs growth.

Rio Tinto managing director Australia David Peever said yesterday that the company intended to play a constructive role in the consultation process outlined by the government.

Contact

Michelle Liang Asia Business News Asia Bureau Tel: +61-2-9247-4344 Email: michelle.liang@abnnewswire.net