Rio Tinto Calls Aussie Mining Tax A Sovereign Risk

Rio Tinto RTP, one of the three largest iron ore producers in the world, called Australia's proposed 40% tax increase on mining firms the company's top sovereign risk while adding that it is reviewing all of its Australian investments. Plans for the tax, which would not take effect until 2012 if passed, were disclosed earlier this month, leading to a broad-based sell-off in materials stocks. Analysts have said the tax would negatively impact new investments by mining firms in Australia and mergers and acquisitions activity in the sector. Last week, Bank of America downgraded shares of Rio Tinto to "neutraL from "buy" with a $48 price target on concerns Europe's sovereign debt crisis would weigh on the company's profits.