Anglo Iron Ore Unit Gets $230 Million South Africa Tax Fineby
Fines, interest due at Sishen unit for tax years 2006 to 2010
Kumba, majority owned by Anglo, to defend itself `vigorously'
Kumba Iron Ore Ltd., majority owned by Anglo American Plc, has been hit with penalties and interest of 3.7 billion rand ($230 million) on an unpaid tax bill in South Africa.
The sum is in addition to the 1.8 billion rand the South African Revenue Service says the company’s Sishen division owes for the years 2006 to 2010, which Kumba previously disclosed Feb. 9. Kumba will appeal the rulings and “vigorously” defend itself, it said Monday in a statement.
“Kumba’s legal advisers believe they have a strong case so this will probably drag on for some time,” said Andrew Snowdowne, a Johannesburg-based analyst at Investec Ltd. The size of the interest and penalties “is a surprise.”
The ruling may hinder Anglo’s plan to offload its 69.7 percent in Kumba by next year. The bill plus penalties and interest total 5.5 billion rand, almost a quarter of Kumba’s market value. Kumba had a been a major source of Anglo’s dividends until last year, with Sishen the biggest iron-ore mine in Africa. The company’s now cutting jobs and expenditure after a slump in the price of iron ore, down 67 percent since the beginning of 2013.
Kumba rose 7.9 percent to 76.60 rand by 1:51 p.m. in Johannesburg, reaching the highest since October and valuing the company at 24.7 billion rand. Iron ore with 62 percent ferrous content delivered to China’s port of Qingdao climbed 2.8 percent to $49.62 a dry ton on Monday, the first gain in three days, according to Metal Bulletin Ltd.