Rio shelves iron ore projects

Rio has announced it is shelving its iron expansion plans in the wake of the proposed mining tax.

Rio Tinto has announced that it will put its West Australian iron ore projects on hold in the wake of the proposed super tax.

The miner has withdrawn plans for its $11 billion iron expansion due to the uncertainty raised by projected 40% tax on mining profits.

On the back of Rio’s decision, BHP Billiton is also reassessing the viability of its iron ore and coal projects through New South Wales, Queensland and Western Australia.

Following these announcements, Origin Energy stated that the resource super tax also has the potential to drive up retail energy prices as coal and gas becomes more expensive, and drives up power plant operating costs.

“Wholesale energy prices are likely to increase with any increase in resources tax,” Origin said.

However, while Prime Minister Kevin Rudd has not outlined the tax as completely non-negotiable, he stated that the 40% tax is “about right.”

The tax is meeting with stiff opposition throughout the mining sector

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