R/€ = 15.22
R/$ = 14.40
Au 1056.85 $/oz
Pt 829.50 $/oz
Sep 10, 2002
Chile copper-mine conflict drags onBack
© Reuse this Chile's mining minister said last week there has been no progress in talks with Exxon Mobil, over government demands that the company pay taxes on its planned $1,3-billion sale of mining assets.
Exxon and Chile's government clashed after the US giant agreed in May to sell its copper mining unit, Disputada de las Condes, to South African miner Anglo-American, in an offshore transaction that would be exempt from the country's capital gains tax.
Chile, the world's top copper producer, wants Exxon to pay taxes on the profits from the sale.
The tax could be anywhere between $30 and $300-million.
The government of socialist President Ricardo Lagos also wants Exxon to recognize an option held by state-owned miner Enami to buy back up to 49% of Disputada.
Enami acquired the option in 1978 when it sold Disputada to Exxon for $98-million.
Both issues have held up the Exxon-Anglo deal.
"I would say there are no advances that I could tell you of, other than that conversations continue on both issues," Mining Minister Alfonso Dulanto told reporters last week.
Dulanto, who met top Exxon executives a week ago, said he was optimistic, but that an agreement could take some time. "Clearly, our intent is to bring the results of these talks to the (Chilean) president as soon as possible," Dulanto said.
Exxon has declined to comment on the talks.
The company has been at the hub of a controversy in Chile in recent weeks over the tax obligations of foreign mining companies.
The country holds 40% of the world's reserves of the metal, and copper is a key income generator for the state.
In the past decade, eight of the largest 10 foreign mining companies in the country have not paid income tax, according to a government study.
The average annual profit ratio among these companies was 15,8% from 1997 to 2001, it said.
Exxon's Disputada has declared financial losses during its 24 years of operations in the country and therefore has never paid income tax.
Critics allege that local units of multinationals like Exxon elude Chilean taxes by taking out debts at above-market rates with sister subsidiaries based in tax havens, such as Bermuda and Bahamas.
Interest payments and other tax loopholes artificially depress their earnings reports, they say.
"I don't think anyone can believe that a company like Exxon would hold onto a bad business for 24 years because that would mean they came here to do charity work," Senator Jorge Lavandero said.
Chile has received $16-billion in direct foreign investment in mining in the last 10 years.
President Lagos has rejected proposals for a royalty tax on copper production, but is seen as wanting current tax rules to be more strictly enforced.
Analysts say the outcome of the Chile-Exxon controversy could be more transparent tax planning by miners in Chile and slightly higher costs in the long run.
"We think the debate over royalties and the investment platform bill will serve to catalyze the industry into being less aggressive in future tax planning, and to seek ways to build a more positive industry image among the populace," UBS Warburg said in a report this week. – Reuters.
Edited by: Martin Czernowalow© Reuse this Comment Guidelines (150 word limit)
Other Mining News
Updated 1 hour 38 minutes ago The iron-ore price on Singapore's most active iron-ore futures market was below $40/t for the first time, Investec noted on Monday, when it reported that additional iron-ore supply was about to be shipped from Gina Rinehart’s new Roy Hill iron-ore mine, in Australia....
Updated 1 hour 51 minutes ago Significant progress has been made on advancing and finalising the acquisitions of Anglo American Platinum’s (Amplats’) Rustenburg operations and Aquarius Platinum, Sibanye Gold said on Monday. Aquarius and Sibanye in October entered into an implementation agreement...
Gold dipped to its lowest level in nearly six years on Friday and was heading for a sixth straight weekly decline under pressure from a firm dollar and prospects of a US interest rate rise next month. Spot gold hit $1 055.99 /oz, its lowest since February 2010, and...
Updated 33 minutes ago The June addition of technology investment group Parsec Holdings to the Ansys stable has invigorated the niche technology-driven engineering group’s interim performance, precipitating a 93% uptick in revenue to R155.1-million and a 333% improvement in earnings before...
Updated 1 hour 44 minutes ago The iron-ore price on Singapore's most active iron-ore futures market was below $40/t for the first time, Investec noted on Monday, when it reported that additional iron-ore supply was about to be shipped from Gina Rinehart’s new Roy Hill iron-ore mine, in Australia....
Updated 2 hours 42 minutes ago World leaders will launch an ambitious attempt on Monday to hold back the earth's rising temperatures, urging each other to find common cause in two weeks of bargaining meant to steer the global economy away from dependence on fossil fuels. They arrive at United...
Recent Research Reports
Water 2015: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2015 Report considers the aforementioned issues, not only in the South African context but also in the African and global context in terms of supply and demand, water stress and insecurity, and access to water and sanitation, besides others.
Input Sector Review: Pumps 2015 (PDF Report)
Creamer Media’s 2015 Input Sector Review on Pumps provides an overview of South Africa’s pumps industry with particular focus on pump manufacture and supply, aftermarket services, marketing strategies, local and export demand, imports, sector support, investment...
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
Road and Rail 2015: A review of South Africa's road and rail sectors (PDF Report)
Creamer Media’s Road and Rail 2015 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail infrastructure and network, the funding and maintenance of these respective networks, and...
Defence 2015: A review of South Africa's defence sector (PDF Report)
Creamer Media’s Coal 2015 report examines South Africa’s coal industry with regards to the business environment, the key participants in the sector, local demand, export sales and coal logistics, projects being undertaken by the large and smaller participants in the...
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
This Week's Magazine
The BMW Group will invest R6-billion at BMW Group South Africa’s (BMW SA’s) Rosslyn plant to produce the next-generation X3 sports-activity vehicle (SAV) for the local and export markets. Rosslyn will continue production of the current 3 Series through its lifecycle,...
The lack of consequences for poor performance and transgressions on the part of contractors remains a significant hurdle to tackling South Africa’s service delivery challenges, delegates heard at the Consulting Engineers South Africa Infrastructure Indaba, on...
City of Ekurhuleni executive mayor Mondli Gungubele earlier this month officially named the city’s bus rapid transit (BRT) system, Harambee.
About 58% of unstructured data stored by companies is dark data, which means that the value or regulatory importance of the data has not been determined. Subsequently, most of the stored data add costs, rather than increasing revenue or reduce regulatory risks, says...
Effective logistics, import/export and manufacturing consulting services require detailed industry knowledge and experience, but can add significant value to these industries by providing expert advice on various technical elements in their value chains, says...