Miner Rio ‘paid no Australian mining tax’

Resources giant Rio Tinto has reportedly paid no tax under the Australian government’s new mining levy, after pre-payments made this year were refunded.

Fairfax media reported on Thursday that review work by Rio Tinto and the Australian Taxation Office since June 30 showed the the Anglo-Australian miner was not liable to pay any tax under the Minerals Resource Rent Tax (MRRT) for the 2013 financial year.

The Australian newspaper reported Rio Tinto had received a refund of up to $74m on payments it had already made – $1m less than the tax threshold.

Sam Walsh, the chief executive, confirmed in February that it did not pay any Minerals Resource Rent Tax (MRRT) in 2012.

“Given that the MRRT is a tax that kicks in when prices are high, you certainly won’t expect to have an MRRT liability when commodity prices are low,” Mr Walsh said.

The latest tax revelation came one day after Australia’s High Court upheld the ruling Labor party’s contested MRRT, dismissing a constitutional appeal from major iron ore firm Fortescue Metals Group.

Fortescue, founded by billionaire Andrew Forrest, had asked Australia’s highest court to rule that the MRRT was an incorrect use of the government’s legislative powers.

The levy, which came into force on July 1 last year, taxes profits of more than $75 million on iron ore and coal at an effective rate of 22.5 percent. 

It was watered down after a publicity campaign by miners BHP Billiton, Rio Tinto and Fortescue, which contributed to Prime Minister Kevin Rudd being ousted by his deputy Julia Gillard in 2010, amid plunging opinion poll ratings.

Pacific Aluminium sale scrapped

Rudd deposed Gillard to retake the top job in June and is now campaigning for a third term for Labor. Australians go to the polls on September 7.

Also on Thursday, Rio Tinto scrapped efforts to sell its loss-making Pacific Aluminium business, blaming poor market conditions, as weaker iron ore, copper and coal prices dragged its first-half profit down by 18 percent.

Rio, which has put a handful of assets on the block as it concentrates on core operations and gets to grip with $22 billion of debt, said in 2011 it could hive off Pacific Aluminium, known as Pac Al. But it said on Thursday it had not found a buyer and would not pursue a spin-off to shareholders.

Walsh said there had been offers for the business but all had been below the price Rio wanted. It would instead bring Pac Al back into the fold of Rio Tinto Alcan, its main aluminium business.

“It doesn’t make sense to give things away just so you can tick the box,” Walsh said.

Rio has so far this year announced or completed $1.9 billion of sales, but these have been copper mines and projects, wheredemand has been stronger and sales more straightforward.

Underlying world earnings for the group fell 18 percent to $4.23 billion in the first six months of the year, in line with forecasts. Weaker prices, particularly iron ore, took $1.3 billion off the earnings.

Net profit fell to $1.7 billion, hit by a non-cash currency exchange loss of $1.9 billion and a $300 million write-off after a landslide at Bingham Canyon copper mine in the US.