Rio boss warns of min­ing tax im­pact

Pilbara News - - News - Gareth Parker

Rio Tinto’s iron ore boss has warned WA Na­tion­als leader Bren­don Grylls’ min­ing tax plan would “severely un­der­mine” the gi­ant’s business and wipe out re­cent ef­forts to cut costs.

In an up­date sent to se­nior Rio man­agers, the miner’s iron ore chief ex­ec­u­tive Chris Sal­is­bury said the pro­posal to in­crease the so-called pro­duc­tion rental fee from 25¢ a tonne, the price struck when orig­i­nal State agree­ments were signed in the 1960s and 1970s, to $5 a tonne would add $1.5 bil­lion a year to costs.

“Through all your hard work in driv­ing im­prove­ments we have taken three years to re­move $1.2 bil­lion of cash cost from our business,” Mr Sal­is­bury wrote. “The WA Na­tion­als tax would undo all that ef­fort in one hit.

“I am see­ing some great team ini­tia­tives in our cost re­duc­tion and pro­duc­tiv­ity pipe­lines, more than 1000 iden­ti­fied to date.

“I’m im­pressed by the de­ci­sions you are mak­ing and the am­bi­tious im­prove­ment plans you are tak­ing on, with each con­tribut­ing to our re­quired plan for 2016 and be­yond.

“How­ever all these ini­tia­tives come nowhere near com­bat­ing the im­pact of the WA Na­tion­als tax pro­posal; it is dif­fi­cult to imag­ine what fur­ther cost and pro­duc­tiv­ity im­prove­ments would be re­quired to deal with an ex­tra $1.5 bil­lion in an­nual costs,” Mr Sal­is­bury wrote.

Mr Grylls has framed his pro­posal as a new rev­enue source that is re­quired to ad­dress what he de­scribes as WA’s “struc­tural” bud­get deficit, say­ing he be­lieves Rio and BHP Bil­li­ton should pay more, rather than “mums and dads”.

Mr Sal­is­bury said the sug­ges­tion min­ers could pay more ig­nored the fact that earn­ings, af­ter pro­vid­ing a re­turn to share­hold­ers, were in­vested back into the Pil­bara to sus­tain op­er­a­tions.

He cited the an­nounce­ment in Au­gust of a $US338 mil­lion com­mit­ment to ex­pand the Sil­ver­grass mine, a project the com­pany says will sus­tain 500 jobs dur­ing con­struc­tion, that could be threat­ened if the tax plan goes ahead.

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