Rio calls for carbon price

RIO TINTO has followed in the footsteps of its rival BHP Billiton in calling for a price on carbon, saying the mining industry plays a key role in responding to the global challenge of climate change.
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Rio Tinto chief executive Tom Albanese

Staff Reporter

In his address to the China Overseas Investment Fair, Rio chief executive Tom Albanese said that responding to climate change was a “critical aspect” of Rio’s business strategy.

“We recognise that a move to a low-emission global economy is vital and it will call for a price on carbon – potentially resulting in higher energy prices,” he said.

“However, the transition must occur in such a way that global energy security and economic growth are not reversed in the process.”

Albanese stressed the resources sector had a major role to play by reducing emissions through its operational cycle.

“Competitor advantage will be with companies who can demonstrate a low-carbon footprint,” he added.

Albanese’s remarks come after BHP Billiton chief executive Marius Kloppers’ speech in September in which he acknowledged the Australian government would need to introduce a carbon tax in some form, and urged the federal government to take unilateral action if a worldwide policy framework could not be negotiated.

Meanwhile, Albanese also stressed the importance of Rio’s partnership with China during his address.

“China’s phenomenal growth story underpins our long-term confidence in this market and provides us with the belief to maintain our expansion plans in Australian iron ore and elsewhere,” he said.

“China is important to us in many ways and we see the relationship as one between partners, rather than simply supplier and customer.”

Earlier this year, Rio signed a joint venture agreement with Chinalco for the development of the Simandou iron ore project in Guinea.

“It’s a classic example of the future options open to Rio Tinto and China in terms of the future of global mineral resources,” Albanese said.

“Together we are developing the largest private integrated iron ore and infrastructure project ever developed in Africa – and the world’s largest greenfield iron ore project.”

Albanese went on to say China accounted for a quarter of Rio revenues with sales to China rising from $US400 million in 2000 to nearly $11 billion today, while China is also a huge supplier of goods to Rio amounting to $700 million.

He also said the Chinalco partnership opened the door for further cooperation with China’s state-owned enterprises.

“I have two ideas in this regard,” he said.

“The first revolves around China’s growing interest in acquiring resources abroad, of which the Simandou joint venture is a good example.

“The second idea revolves around assisting China in the search for world-class minerals resources in its own backyard within China.

“I do believe Rio Tinto’s experience in exploring for and finding mineral resources around the world could usefully be brought to bear to supplement China’s own efforts.

“I also see opportunities for us to team up with Chinese companies to explore outside China, bringing strengths to projects from both sides.”

Shares in Rio were last trading 22c lower at $83.17.