Mr Tom Albanese CEO at Rio Tinto has warned that a form of resource nationalism may spread worldwide as governments try to boost their share of mining profits, potentially curbing supply.

Speaking at a dinner at the Lord's Cricket ground in London, Mr Albanese also used the jettisoned profits tax, widely blamed for Mr Kevin Rudd's demise, as an example of bad policy and issued a veiled warning to other nations to heed his fate.

He said that "Policymakers around the world can learn a lesson when considering a new tax to plug a revenue gap, or play to local politics. Such decisions must be made taking in a wide range of views, in a spirit of consultation and engagement. Ivory towers without windows don't work."

Mr Albanese said that a wave of resource nationalism is now likely as governments try to find ways to increase their revenue share from mining. He added that "They will want to have more control of who develops their natural resources. And this resource nationalism could, by itself, limit the supply response to stronger demand."

His message comes as China flagged plans to extend a tax on oil, gas and coal output nationally, shifting revenue from companies to local governments and raising the price of energy.

Mr Albanese, speaking to more than 500 mining executives at the London function, said that while the Prime Minister Ms Julia Gillard had jettisoned the resources super tax and replaced it with a less onerous tax, he remained cautious about the alternative.
He added that "While it maybe appropriate in Australia it may not necessarily suit a developing country. An emerging economy might see greater advantage in levying production royalties that provide an earlier and more stable revenue stream, in contrast to a resource profits or rent tax. I do want to invest in Australia and recent events remove the great uncertainty which had been holding us back, but, of course, our Australian projects will always have to compete for capital with our other investment opportunities across the globe. While we remain cautious on the outlook, 2010 is shaping up well from Rio Tinto's perspective. Growth is firmly back on the agenda in 2010, and if it hadn't been for the resource tax, we would have had more to talk about on that front."

(Sourced from www.smh.com.au)