Rio Tinto Group Chief Executive Officer Tom Albanese said “resource nationalism” may spread as governments around the world seek to boost their share of mining profits, potentially constraining supply.
“They will want to increase their revenue share,” Albanese, 52, told a mining industry function yesterday in London. “They will want to have more control of who develops their natural resources. And this resource nationalism could, by itself, limit the supply response to stronger demand.”
China, the world’s biggest metals consumer, said it plans to extend a tax on oil, gas and coal output to the entire nation, after introducing the levy in Xinjiang province last month. Australia last week scaled back a proposed new mining profits tax after Rio, BHP Billiton Ltd. and Xstrata Plc led a campaign against the original plan.
“Whether these tax concepts will spread elsewhere, especially in developing countries, will depend on the particular circumstances of the investment opportunity,” Albanese said. “While it may be appropriate in Australia it may not necessarily suit a developing country.”
Rio gained 1.6 percent to A$68.10 in Sydney trading on the Australian stock exchange. The stock advanced 3.2 percent in London to close at 3,172.5 pence.
Citigroup Inc. analysts said in May that Canada, Peru and Chile may follow Australia in boosting mining taxes. China will set a benchmark rate of 5 percent that will vary across commodities, Du Ying, vice chairman of the National Development and Reform Commission, said in Beijing yesterday. It’s unclear when it will be applied nationwide, he said.
Rio is the world’s third-largest mining company and second-biggest exporter of iron ore, used to make steel. It’s planning major mine investments in Australia, Guinea and Mongolia, Albanese said yesterday.
In Australia, former Prime Minister Kevin Rudd’s plan to impose a 40 percent tax on mining company profits led to his ouster as his approval ratings slumped amid opposition from mining companies. His successor, Julia Gillard, trimmed the proposed levy to 30 percent and said it would only apply to coal and iron-ore mines to win the industry’s support.
Rio resumed a review of expansion options in Australia against a more “positive backdrop,” Albanese said. Xstrata, the world’s biggest exporter of power-station coal, this week said it has resumed work on a A$6 billion ($5.2 billion) coal project.
“I do want to invest in Australia and recent events remove the great uncertainty which had been holding us back,” Albanese said. “And I am keen to get projects moving again.”
Rio is considering an expansion to 300 million tons by 2015 from 220 million tons at its operations in Western Australia’s Pilbara region. An expansion of the mines may cost A$12 billion ($11 billion), Citigroup Inc.’s Clarke Wilkins said in a report in May.
-- With assistance from Rebecca Keenan in Melbourne. Editors: Amanda Jordan, Keith Gosman