Rio, BHP attack Australian iron ore levy plan as damaging, unfair

* Iron ore prices higher, but still vulnerable

* Analysts also say the proposal unfair

LONDON, Aug 9 (Reuters) - Mining giants Rio Tinto (LSE: RIO.L - news) and BHP Billiton (NYSE: BBL - news) on Tuesday issued statements attacking proposals for a new Australian mining tax as damaging and unfair.

Brendon Grylls, leader of the National Party in Western Australia, has proposed an iron ore levy of A$5 a tonne that would specifically target BHP and Rio.

"We do not understand why a proposal that is so discriminatory and uneconomic would be targeted at two companies," BHP said in a statement.

"Miners in Western Australia are operating in an international market and we have to be able to compete or will lose market share."

It added BHP Billiton had paid $65 billion in taxes and royalties in Australia over the past 10 years, including $10.6 billion in royalties to the West Australian government.

In addition, it said it had invested more than $25 billion into the Pilbara in Western Australia over the last decade.

Separately, Rio Tinto said it was also one of Australia's largest corporate taxpayers and has paid royalties of almost $11 billion to the Western Australian government since 2010, on top of the $52 billion spend on local goods and services over the same period.

"There are no grounds for a new mining tax in Western Australia," it said.

Iron ore has climbed to a two-year high above $60 a tonne, buoyed by Chinese imports, but analysts said prices remain vulnerable in a market that is expected to be oversupplied for the foreseeable future.

London-based analysts said Grylls' levy could become punitive.

"Any revenue-based tax is always in my view difficult because when the times are good it becomes de minimis, but in the bad times it can become punitive," Jeremy Wrathall, analyst at Investec (LSE: INVP.L - news) , said.

(Reporting by Barbara Lewis, editing by David Evans)