Australia Tax: Rio Tinto says Canberra's tax plan would nationalise industry

Sydney - Mining giant Rio Tinto Ltd on Sunday accused the Australian government of trying to nationalise 40 per cent of its business by changing the way the resource industry is taxed.

The government is planning a 40-per-cent tax on "super profits," triggered when mining company profits climb beyond 6 per cent.

Industry officials said the state would become a "silent partner" in mining projects, because as well as taking 40 per cent of windfall profits, it would also pay 40 per cent of losses on mining projects that failed.

Rio Tinto chief executive Tom Albanese said the change threatened billions of dollars of investments. He said the government would become a partner in projects it had not put up the initial capital for, and hike taxes on mature projects to a world-record rate.

"These are all now at risk," he said. "Because we have someone now coming in to say: 'I want to be your silent partner, I want 40 per cent of your pre-tax profits and largely written-off assets.'

"These are tremendously large numbers and this is a tremendously large risk - that's why I have said this is my number one priority on sovereign risk around the world," he told national broadcaster ABC.

Albanese ridiculed the notion that having the government as a silent partner would reduce risk and thereby stimulate investment.

He said companies would not be encouraged to invest in projects in the hope of being reimbursed for losses if they failed.

"We plan for success; we don't plan for failure," the head of the world's second-largest mining company said.

Albanese said over half Rio's assets were in Australia and that it was paying the government in Canberra around 35 per cent of its profits in taxes, rather than 17 per cent as the government claims.

He said the super-profits tax would lift the tax burden above 50 per cent, which would be "much, much higher than any other mining country in the world today."

Since the unveiling of the new tax plan May 2, billions of dollars have been expunged from the value of mining company shares.