Monday, May 24, 2010

Believable statement? Rio says Australia number one sovereign risk worldwide

From Business Spectator today:

"Global miner Rio Tinto Ltd has described Australia as the company's top sovereign risk and says it is reviewing all of its capital spending plans in Australia as a result of the federal government's proposed resource super profits tax (RSPT).

"This is my number one sovereign risk issue on a global basis," Rio chief executive Tom Albanese said, noting that the tax had set up the prospect of a long period of uncertainty which was corrosive to new investment.

"If we are dealing with a, say, two-year extended period of time... in that period, we'd be asking our managers to evaluate it on a worst-case basis," he said, adding that capital would shift in the meantime to other resource-rich nations like Canada.

Mr Albanese said the miner's Australian managers had been asked to review all projects under a worst-case tax scenario.

Speaking to journalists after arriving in Australia ahead of Rio's annual general meeting, Mr Albanese warned the miner's operations in Western Australia's Pilbara region would not have achieved their scale under such a tax.

"If the tax had been in place 10 years ago, we would not have made the investment ... in the Pilbara," he said."

HT: Chris Joye

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