Australian Reports Hint at Chinalco Problems due to Mining Tax

Chinalco has said it could temporarily pull out of a $3bn bauxite mining project in Queensland, Australia, because of the Australian Government's super profits tax on mining.

The Chinese diversified mining company said it is considering whether or not to suspend operations in mining in view of the Australian Government's plan to levy a 40% resource tax, rising costs, insufficient demand and high taxes.

According to a report in the Australian Financial Review, it is also wants to have a clause saying it has to refine products in Australia removed from its approval, saying it instead wants to refine products in China.

Chinalco agreed to develop the bauxite mine with an initial annual capacity of 6.4 million tons and construct bauxite loading facilities and an alumina refinery with an annual capacity of 2.1 million tons.

A report in a Chinese daily has said, however, that Chinalco does not want to abandon the project.