The world’s worst currency for the month of May has been the Aussie dollar, and it continues to collapse, as the Tuesday trading day begins.The country has been buffeted by two things: possible slowing weakness, and a self-inflicted wound from the government instituting a 40% mining supertax.
It’s with that in mind, that the chief of mining giant Rio Tinto has now declares Australia to be his country’s number one sovereign risk.
Global miner Rio Tinto said it is reviewing all investments in Australia due to a proposed new tax, describing the country as its No.1 sovereign risk concern and sending a weak Australian dollar even lower.
Australia, which accounts for the bulk of Rio’s revenue from iron ore, coal and other commodities, had been considered a top safe-haven investment destination for miners hunting the raw materials to fuel Asia’s growth.
But plans by Prime Minister Kevin Rudd to introduce a 40 per cent tax on miners’ so-called super profits has sparked high-stakes political battle ahead of a general election later this year.
“This is my number one sovereign risk issue on a global basis,” Chief Executive Tom Albanese told reporters on Monday, noting that the tax had set up the prospect of a long period of uncertainty which was corrosive to new investment.
This mining tax has gone over so badly, it’s really hard to see it sticking. The major miners are pushing back hard, and they’re getting help from the collapsing currency.
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