NEW YORK (TheStreet) -- Australia's so-called "super profits tax," which would levy a 40% surcharge on all profits derived from extracting natural resources from the island continent, has drawn another round of stinging criticism from mining corporations, this time from Rio Tinto (RTP) - Get Report chief Tom Albanese and other top executives, who gathered in Miami for an industry conference earlier this week.
Albanese, who runs the world's third-largest mining concern, said in a speech Tuesday that he was "shocked" by the tax, put forward last week by the progressive government of Australia Prime Minister Kevin Rudd.
"In addition to being capable of being surprised by the financial markets, we're also capable of being shocked by governments," Albanese said. "We are concerned about the mining super tax. We are not opposed to tax reform per se, but it should protect against sovereign risk and improve industrial competiveness."
Suffice it to say that Albanese does not believe that the proposed tax would improve Australia's competitiveness. His comments predictably echoed other mining magnates, including
CEO Marius Kloppers, who said much the same thing last week, and Andrew Forrest, the billionaire iron-ore maven and founder of
Fortescue Metals Group
, who said the tax was essentially an effort by the Australian government to nationalize its mining industry.
The CEO of Anglo-Swiss mining giant
, Mick Davis, also made his opinion known at the conference. "This is the biggest assault on the mining industry I have witnessed in my now long involvement in the sector," Davis said, as quoted in the
Rio Tinto and BHP Billiton are substantially owned by non-Australians. Rudd's argument for the tax partly rests on that fact. In defending the levy, he recently said that surging miner profits over the last decade have not benefited the Australian taxpayer to an equitable degree.
Mining executives counter that a resources tax of this size will drive investment out of the country -- thus reducing the profits available for the Australian government to tax.
So far, investors have removed money from the equity of companies with big mineral assets Down Under. Rio's shares, for example, have declined 21% since touching a split-adjusted 52-week high of $62.24 in early April. BHP's American depositary receipts have fallen 17% over the same period.
The tax has come as Rio, BHP and Brazil's
-- the world's three largest miners of iron ore -- have successfully
to the world's steelmakers, shifting from an annual sales contract to a quarterly one. The shorter-term pricing would boost miners' earnings in times of rising spot prices for iron ore.
-- Written by Scott Eden in New York
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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining TheStreet.com, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.