Kumba Drops to Seven-Week Low on Potential $70 Million Tax Billby
Tax assessment for 2011 excludes potential interest, penalties
Anglo unit objecting to separate 5.5 billion-rand assessment
Kumba Iron Ore Ltd. fell to the lowest seven weeks in Johannesburg trading after the Africa’s biggest producer of the steelmaking material said it faces an additional tax liability of more than 1 billion rand ($70 million).
The South African Revenue Service has sent Kumba a letter indicating “potential adjustments to the company’s taxable income” for 2011 that would result in an additional tax liability of about 1 billion rand excluding potential interest and penalties, should the producer be assessed on this basis, the Pretoria-based Anglo American Plc unit said in a statement Tuesday. This relates to Sishen Iron Ore Co., in which the company has a 73.9 percent stake.
Kumba’s Sishen “disagrees with SARS’s audit findings and will respond to the letter accordingly and within the prescribed period,” it said.
In February, the company said Sishen got a tax assessment of 5.5 billion rand for the 2006-10 tax years, which includes 3.7 billion rand of penalties and which the producer has objected to. It has also applied for a suspension of payments relating to this assessment and has yet to get a response from SARS, it said Tuesday.
The stock dropped as much as 5.7 percent to 125 rand, the lowest intraday level since July 27, and traded 4.5 percent lower at 126.50 rand at 9:15 a.m. in Johannesburg.
A field audit for the 2012 and 2013 tax years is underway, it said.