Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Rio Says Mining ‘Nationalism’ May Spread, Curb Supply

Don't Miss Out —
Follow us on:
Tom Albanese, chief executive officer of Rio Tinto Ltd.
Tom Albanese, chief executive officer of Rio Tinto Ltd., leaves after a press conference in London, on Aug. 20, 2009. Photographer: Simon Dawson/Bloomberg

July 9 (Bloomberg) -- 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.

Rudd’s Ouster

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

To contact the reporter on this story: Jesse Riseborough in London at jriseborough@bloomberg.net

To contact the editor responsible for this story: Amanda Jordan at ajordan11@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.