Rio ready to ramp up projects after tax resolution

Rio Tinto says it is looking to expand its activities again in the wake of the federal government’s switch to a resource rent tax for the mining industry.

Rio Tinto chief executive Tom Albanese told a mining function in London overnight that he had asked his team to review all projects against the ‘‘more positive backdrop’’ of the resource rent tax, which replaces the earlier proposed resources super profits tax.

"This week, I have now asked my team to review projects against this more positive backdrop,’’ Mr Albanese told a meeting of the Melbourne Mining Club. ‘‘As I’ve said, I do want to invest in Australia and recent events remove the great uncertainty which had been holding us back. And I am keen to get projects moving again.’’

In the wake of the super profits tax debate, Rio Tinto put on hold plans to boost its Pilbara iron ore production capacity from 230 million tonnes a year to 330 million tonnes when the RSPT was announced.

This week, the miner also said it would restart a feasibility study into a planned $12 billion expansion of its Pilbara iron ore operations.

Mr Albanese said the mining giant was looking to increase operations in the wake of the global financial crisis.

"At the beginning of the year, I said we had seen a recovery from the depth of the global financial crisis but that we could expect more volatility in the global economy, and that’s exactly what we are experiencing today,’’ Mr Albanese said. ‘‘While we remain cautious on the outlook, 2010 is shaping up well from Rio Tinto’s perspective.

"In the first quarter of this year, most of our operations continued to run flat out and we will update the market next week on our second quarter performance.’’

Mr Albanese said the replacement of the Resource Super Profits Tax （RSPT） with the MRRT was a step in the right direction, but there still was room for negotiation.

"We have been encouraged by the government’s constructive engagement over the last couple of weeks,’’ Mr Albanese said. ‘‘Compared to the super tax, the MRRT goes a long way towards addressing concerns about international competitiveness, but it is important to note that the Government’s new proposal, as it stands, still would leave Australia at the high end of the global taxation scale for the commodities of coal and iron ore.

"We now have further opportunity to work constructively with the Government to ensure that the tax system continues to encourage investment in Australia, but there is still much work to be done to finalise the details.’’

Mr Albanese cautioned other countries considering a similar mining tax.

"I would advise policy makers to think carefully about country specific factors at play, the impact of decisions on international competitiveness, and appropriate compensation for the risks assumed,’’ he said. ‘‘While it may be appropriate in Australia, it may not necessarily suit a developing country.

"Policy makers around the world can learn a lesson when considering a new tax to plug a revenue gap, or play to local politics.''