Stocks To Watch Rio Tinto (RIO)


The new government-proposed resources tax will see Rio Tinto (RIO) reviewing the impact on all its operations.  In a broader sense, miners are stocks to watch at this particular moment.

RIO did note that a feasibility study into expanding its iron ore operations in Western Australia will go ahead.

PM Kevin Rudd confirmed his government won’t be deterred from introducing a 40% tax on mining sector super profits, despite industry opposition.

RIO later advised that it would stump up US$235 million to re-commence the expansion of its Iron Ore Company of Canada (IOC) operations.

The expansion will increase annual concentrate capacity by 4 million tonnes to 22 million by 2012.

The IOC operation was suspended in 2008 after the global financial crisis hit the world economy, and its recommencement reflects the recovery in demand for iron ore.

RIO’s share of the total project cost for the first stage expansion is US$292 million – up US$22 million from the original estimate.

One could argue that the IOC expansion is RIO’s way of voicing its opposition to the new tax, showing the government that it has no problem ramping up its offshore projects at the expense of its domestic projects.

The uncertainty created by the tax means RIO is one of the key mining stocks to watch at the moment.