Rio Tinto announced record first-half underlying earnings of $US5.8 billion ($A6.34 billion) last week – 125% up on the 2009 first half.

Ferguson told the Australian Petroleum Production and Exploration Association 2010 National Oil & Gas Safety Conference yesterday that the strong profit recorded by Rio was solid evidence the mining sector could afford to pay more in tax through the government’s revised Minerals Resource Rent Tax.

While the big three – Rio, BHP Billiton and Xstrata – have already signed off on the deal, the tax is still facing bitter opposition from smaller mining companies.

But Ferguson told conference delegates he believes the matter has been largely settled, with only the details to be thrashed out over the coming months.

“I actually think to a large extent the question of the mining tax has fallen to the ground to some extent. There is a sigh of relief in the industry, there is a balanced outcome, there is a compromise,” he said.

“Just look at the Rio Tinto profits of last week, if I need any evidence about the capacity of industry to pay more.”

Ferguson expects to have wrapped up the ongoing discussions over the details of the tax by Christmas, assuming the current Labor government is re-elected on August 21.

“...I would want the principals and application wrapped up by Christmas, that’s my work plan,” he said.

“The feedback that I am getting is that in the minds of a lot of people, the world has moved on, there was a tough argument about the nature of the tax.

“There is a balanced compromise, people accept the industry should pay more, we are never going to please everyone, but the government had to make a decision.”

Ferguson reiterated the government’s argument that hiking taxes on mining companies would deliver a “fairer” result to the broader Australian community.

“There is a good return to the Australian community in terms of a bigger tax take and, as I just referred to, what was Rio Tinto’s profit last week, a 125% increase wasn’t it. I think that speaks for itself, didn’t it?

“I’ll wait for other major competitors in terms of their balance sheets. Makes very interesting reading,” he said.