The Chinese state-owned miner MMG has cautioned the Federal Government that MMG's proposed $500 million to $800 million development of the Dugald River zinc project in Queensland could be hampered with the emergence of a national resources rent tax.

The introduction of a national resources recent tax in place of state-based royalties is speculated to be a vital step in a review of the tax system by the Treasury secretary, Ken Henry, which the Government is now considering.

The managing director of MMG, Andrew Michelmore, quoted yesterday that the proposed resource rent tax was causing considerable jitters to the company.

For the fourth quarter, zinc production reports to be only 55,906 tons, compared with 206,515 tons last year.

Sepon witnessed its copper production to be up by 10 per cent at 18,124 tons for the quarter, and up 5 per cent at 67,561 tons for the year.

MMG grabbed major part of OZ Minerals' mining assets for $1.7 billion in June last year, as part of OZ's aggressive restructuring to counter the effects of global financial crisis.

''MMG expects increasing demand from China from continuing fiscal stimulus to fuel good metal demand through 2010 and considers that a sustainable recovery has commenced in several key industrialized economies',' Mr Michelmore said.