Australia may limit miners' tax as Rio Tinto attacks

Metals giant Rio Tinto today renewed its attack on the Australian government over its proposed supertax on miners' profits, just as the country's prime minister Kevin Rudd indicated he may water down parts of the measure.

In a letter to shareholders, Rio Tinto chairman Jan du Plessis said the proposed tax "had been developed in a vacuum and is divorced from the day-to-day realities of business".

He claimed the initiative would "penalise efficiency, discourage competitiveness, curtail investment and limit jobs growth" and added: "There has been a considerable increase in the perceived risk of investing in Australia."

Rudd, facing a slump in electoral support that could see his government lose office after a single term, said it may compromise parts of the 40% tax, especially the growing coal-seam gas sector, which includes British big players such as BG and Royal Dutch Shell.

Coal-seam gas firms say they should be allowed to opt out of the tax and instead be subject to an existing regime for offshore gas developers.

Resources minister Martin Ferguson said he was prepared to think about arguments against a "one size fits all" tax but stopped short of confirming reports that the government was adjusting the measure.

"We're not talking about different tax rates," he told ABC Radio. "What we have said we are prepared to focus on ... are the potential generous transitional arrangements.

"I am conscious of the fact that in transitional arrangements there are different arguments in petroleum as it can, for example, [be with] some minerals products."

Miners BHP Billiton, Rio Tinto and Xstrata met the government in Canberra today and released a joint statement saying it had given no acknowledgment that their key concerns would be addressed. So far miners have held back $20 billion of new resource investment in Australia because of the tax.