Rio Tinto and BHP Billiton are dented by UBS forecast

MINING heavyweights Rio Tinto and BHP Billiton saw their shares slide yesterday after UBS reduced its forecasts for the pair.

UBS said that the companies’ Australian tax liabilities will be A$1.8bn (£1.1bn) in the 2013 fiscal year and A$1.4bn in 2014.

The bank cut its estimates for profits at both BHP and Rio by four per cent for 2013, saying the impact of the mining and carbon taxes, which come in on 1 July, would dent figures.

Iron-ore prices have dropped by 20 per cent and mining company valuations 24 per cent in the past year as slowing economic growth weighed on the market.

Rio pulled out of talks for a potential expansion of its coal operations in Queensland state in April, citing uncertainty in economic markets.

The government expects to raise A$3.2bn from the mining tax in 2015 and A$3.7bn in 2016, compared to UBS’s forecasts of A$1.1bn in the year ending 30 June 2015.

Fortescue, Australia’s third biggest iron ore producer, will also be hit by rising taxes, UBS warned.

The Australian government is levying the taxes in the hope of returning the national budget to a surplus in the year ending 30 June 2013.