There has been increasing pressure lately for Rio to relocate its London head office to Australia – Gina Rinehart wants to see the company in Perth, while shareholder activist and City of Melbourne councillor Stephen Mayne has petitioned for a move to Melbourne.
Rio paid over $US9 billion ($A8.8 billion) of its $11 billion 2012 tax bill in Australia and more than three quarters of its earnings are thanks to the Pilbara iron ore division.
As expected, the issue was raised at Rio’s Australian annual general meeting in Sydney this morning.
Rio chairman Jan du Plessis said he and the directors enjoyed coming to Australia – while describing Sydney as the world’s most beautiful city – and the company was committed to the country.
“We are very proud of our Australian connection,” he said.
“We are confident that we are well-connected to the society.”
But he said there were no plans to move and pointed out that 77% of its shareholder base traded shares in the UK.
“At the end of the day, Rio is a global business and will remain a global business,” du Plessis said.
“And on that basis we are comfortable with our head office.”
In response to criticism about lack of diversification, du Plessis said it was something the board discussed regularly.
“Taking the long-term view is not just essential – it’s quite hard,” du Plessis said.
“Who would have thought that 20 years ago the iron ore price would be where it is today?”
He said in the long run, Rio would like to be more diversified, but he said the company was not going to be “trapped” by underinvesting in its strong iron ore business just to achieve that.
Minerals Resource Rent Tax
Rio chief executive Sam Walsh said the company did pay MRRT in the March quarter, though he wouldn’t reveal how much.
“In this quarter just passed, we made a small payment,” he said.
Du Plessis described it more as a “pre-payment”
“In reality we are sort of making guesses as to what we’ll be paying through the year,” he said.
Walsh refused to make a prediction on how much he thought the company would pay this year.
“The MRRT is a complex beast,” he said.
“There’s a lot of moving parts there.”
But both men said Rio was paying its way and low payments due to lower commodity prices were part of the design of the tax.
“We entirely accept that companies like Rio Tinto have to make a significant financial contribution,” du Plessis said.
“We’ve made our fair contribution.”
Walsh said Rio’s Australian tax rate was currently running above 40%.
“We do believe we’re paying our way,” he said.
Rio shares were last trading A26c down at $58.64.
