Profit is proof Rio Tinto subsidy a waste - Labour
Opposition parties have slammed a $30 million taxpayer subsidy given to Rio Tinto, after the Australian mining company posted a $3.7 billion profit.
In August last year, the Government announced it would pay $30m to the New Zealand subsidiary of corporate giant Rio Tinto to persuade it not to close the Tiwai Aluminium smelter. But the Government only has a commitment from the company to stay until January 2017.
Rio Tinto yesterday surprised investors with a better-than-expected profit and dividend in its full-year results presentation.
The diversified miner announced a dividend of US$1.92 (NZ$2.30) after reporting underlying earnings of US$10.2b for 2013.
The dividend announced on Thursday is 15 per cent better than the US$1.67 that was returned to shareholders last year.
Labour state-owned enterprise spokesman Clayton Cosgrove branded the government subsidy as "corporate welfare at its worst".
"[Finance Minister] Bill English bent over backwards to stitch up a deal with Rio Tinto over Tiwai Point. He ignored Treasury advice and, to rub salt into the wound, he made the deal tax free," Cosgrove said.
"Rio Tinto must be laughing all the way to the bank. It can pack up and leave Tiwai in 2016, minus any obligations and having pocketed millions in taxpayer cash."
Greens co-leader Russell Norman said the payment was "unjustified".
"National gave a $30 million hand-out of taxpayer money to Rio Tinto last year," Norman said.
"Now that company has posted a $3.7b profit, [Prime Minister] John Key should be asking for our money back."
At the time of the subsidy announcement in August, English said the broader picture was the 800 well-paid jobs at stake and the uncertainty for the electricity market if the deal was not done.
"Anyone who can take a business away has its community over a barrel and has its workforce over a barrel," he said.
English also admitted the subsidy would help the sub sequent partial sale of Meridian Energy because it would give investors greater certainty.
- Fairfax Media