Vale Royalty Dispute With Brazil Close to End, Minister Says
Vale SA (VALE5) and the Brazilian government are close to an agreement on a dispute over unpaid royalty payments that may reach 7 billion reais ($4.09 billion), Mines and Energy Minister Edison Lobao said.
The Brazilian government is analyzing documentation provided by Vale, the world’s largest iron-ore exporter, and expects to reach a conclusion on the amount of overdue payments, Lobao told reporters in Brasilia today. The amount owed, which was 4 billion reais in 2008, may reach 7 billion reais including penalties and interest, he said.
Vale, based in Rio de Janeiro, has been fighting tax claims from the government amid growth in its exports and rising minerals prices. The company and Brazil’s National Mineral Production Department failed to reach an agreement by an initial October deadline. Talks were extended an extra 60 days earlier this week to bring an end to the dispute.
The company estimated its liability could be as much as 7.88 billion reais ($4.6 billion) in an April 28 filing with the U.S. Securities and Exchange Commission. Brazil is also looking for additional tax payments on profits at Vale’s foreign operations, according to the filing.
A Vale official declined to comment about the minister’s statement today.
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