Rio Tinto’s Palabora Considers Reviving Empowerment Deal
Stock Chart for Palabora Mining Co Ltd (PAM)
Palabora Mining Co. Ltd., a unit of Rio Tinto Plc, may revive plans to sell shares to black investors as South Africa’s government reviews the way tax law changes are implemented.
The National Treasury on June 2 announced an 18-month suspension of Section 45 the Income Tax Act, a move that may tax some inter-company transactions. The move led copper-producer Palabora to suspend its planned sale of shares to black investors, saying that the deal, which was structured to be “tax-neutral,” was no longer viable.
The company’s position may change depending on how the tax law is applied, Palabora spokesman Mike Mabasa said by telephone from the northern town of Phalaborwa today.
“We are already looking at that deal again,” Mabasa said. “It is definitely on the table. It is in our business interests to finalize that deal. Our official position is that if government softens its position, it is a measure that is fully welcomed.”
Finance Minister Pravin Gordhan told reporters in Pretoria today that deals that were stopped because of the changes could go ahead, if there are no “unacceptable tax leakages.” Mabasa hadn’t heard Gordhan’s speech when he commented.
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