Rio Tinto Ltd
(ASX:RIO) says it has cancelled $11 billion worth of expansion plans in Western Australia until it can gain more clarity from the federal government’s proposed mining tax.
The world’s third largest miner says it is putting some of its projects on hold to evaluate the ramifications of a 40% increase in taxes.
Head of iron ore operations Sam Walsh says the concern is that people are looking at the tax during a resources boom, not realising that tough times lie ahead.
The federal government wants to introduce the tax on resource project profits from July 2012.
If implemented, it may reduce Rio’s earning by 21%.
Prime Minister Kevin Rudd met with mining industry executives in Perth for a second day yesterday and stood by his decision, but has agreed to meet with them again next week.
Rio Tinto posted a profit of $5.432 billion in calendar 2009.
