Poland’s updated formula for a planned copper and silver tax to be introduced this year is a “step in the right direction,” the head of metals producer KGHM Polska Miedz SA said.
The new calculation published by the government yesterday is still “unsatisfactory” by global standards, KGHM Chief Executive Officer Herbert Wirth said on the TVN CNBC television station today. The proposal would cut KGHM’s 2012 tax bill by about 10 percent, or 280 million zloty ($81.6 million) less than it would pay under an original proposal, he said.
KGHM shares lost 34 percent through Dec. 30 after Prime Minister Donald Tusk announced the initial tax plan in a speech on Nov. 18. The Finance Ministry lowered the tax rate in the formula yesterday after receiving negative feedback from the Treasury Ministry and the company, which is Poland’s sole producer of silver and copper.
The forecast for tax revenue is still about 700 million zloty higher than the revenue that the Finance Ministry aims to raise in 2012 as both parties have different copper price estimates.
The Treasury Ministry, which supervises the company and holds 32 percent, proposed lowering the tax formula by calling it “disproportionate” in comparison with global standards.
KGHM earlier said the old formula bears “substantial” risk of it “generating negative results” if prices of the metal decline. Today Wirth added that the tax will limit its investments and planned acquisitions outside Poland.
KGHM, which last month agreed to buy Canada’s Quadra FNX Mining Ltd. in a record C$2.28 billion ($2.25 billion) foreign acquisition by a Polish company, said the tax is “no threat” to the takeover and the company won’t need external financing for the transaction, Wirth said today.
Wirth reiterated that the Lubin, southwest Poland-based company, plans to pay 30 percent of 2011 profit as a dividend and that it still aims to ask investors to back its 3 billion-zloty, three-year buyback plan.