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Sydney - Global giant Rio Tinto called Australia's planned new mining tax its top regulatory threat worldwide on Monday and linked it to a steep plunge in the country's currency, in a fresh attack on the levy.
Chief executive Tom Albanese said the tax, which has prompted a coordinated opposition campaign by the industry, had already damaged Australia's reputation and would reverberate through the entire economy.
"This is my number one sovereign risk issue on a global basis, and we need to express that as such," Albanese told reporters.
Sam Walsh, head of Rio's vital iron ore division, said Asian customers had expressed "uniform" concern over whether the tax would mean higher prices for raw materials during talks last week at the World Expo in Shanghai.
The government wants a greater share of the country's Asian-driven mining boom -- which helped the country avoid recession during the financial crisis -- by imposing a 40% tax on profits over six percent of earnings.
"Whether it's Japanese, Chinese, Taiwanese customers who we met with last week, it was the same refrain: they are very, very concerned about the 'Super Tax'," Walsh said.
"They're very concerned about the impact it will have on bringing in additional resources and projects to meet their needs."
The government, falling in the polls and facing likely elections this year, has come under intense fire over the tax at a time of renewed economic wobbles sparked by Europe's debt problems and worries over the Chinese economy.
Australian mining employs a large workforce and produces the country's two biggest exports, coal and iron ore, while millions of people have a stake in the industry through their share portfolios or mandatory pension schemes.
Albanese said Rio was reviewing all planned capital projects as a result of the tax and said the industry was facing an extended period of uncertainty until the levy is finalised.
"We have had a wet blanket placed over all our investment proposals," he said. "It does change the relative attractiveness of Australia versus the other countries we do invest in."
He said Rio did not oppose reform of Australia's complex tax system but hit out at a lack of consultation, and said the government needed to show greater flexibility in its negotiations.
Albanese warned that companies would increasingly look abroad to develop mining projects, citing the example of Canada which also has rich mineral deposits and a strong regulatory framework.
"By the way, the Canadian dollar has not fallen nearly as hard as the Australian dollar," he said.
Australia's dollar hit nine-month lows of 80.73 US cents last week -- down from 93.04 at the end of April -- buffeted by concerns over European debt and China's economy, as well as the mining tax.
"My natural optimism dims on this particular issue. I feel this could take quite a long time and be quite a long debate," Albanese said, referring to the proposed tax.
"There are many countries, Canada included, that would see this as an opportunity to see more mining capital shift in their direction."
The industry has released a series of full-page newspaper adverts attacking the issue as well as a TV commercial saying Australia will effectively tax companies at 58%, "by far the world's highest tax on mining".
- Reuters
