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TORONTO (miningweekly.com) – Global diversified mining giant and commodity trader Glencore has condemned a recent report by Australian media company Fairfax Media, claiming that through aggressive tax structuring, Glencore had paid zero tax over the past three years, despite earning income of A$15-billion.
Business and technology news website Business Insider had published an internal email to staff by Glencore’s coal CE, Peter Freyberg, in which he dispelled the media speculation surrounding its tax payments, saying that the firm had paid A$400-million in corporate income tax since 2011.
He also said Glencore had paid A$8-billion in royalties and taxes, including A$2-billion related to corporate income tax, in Australia since 2007.
“As you will be acutely aware, for much of this period the resource industries in which we participate have faced significant challenges including low commodity prices, high input costs and a robust Australian dollar.
“Profitability is significantly lower than during the preceding four years – the reality is that a significant proportion of Australia’s coal mines are currently operating at a loss and although we run an efficient business, we are not immune to the market conditions.
“Despite these difficult circumstances, we paid more than $400-million in corporate income tax in respect of this period,” Freyberg said.
The erroneous article cited analysis provided to The Sydney Morning Herald's publisher Australia-based Fairfax Media of Glencore's books by an unnamed source "personally concerned at the rampant levels of tax avoidance by multinationals operating in Australia" for its findings.
The report also said Glencore had borrowed from “associates overseas” at inflated rates of 9% on a $3.4-billion loan, “double what the company would have had to pay had it simply borrowed the money from the bank”.
Tax avoidance is a controversial issue in Australia, where the corporate tax rate is 30%, one of the highest rates in the developed world.
Glencore, which acquired fellow Swiss-based resources company Xstrata last year in a $36-billion takeover, is one of Australia's biggest producers of coal and also a major miner of copper, zinc and other commodities.
Meanwhile, Caracal Energy on Thursday said Glencore had received approval through the Investment Canada Act for its plan of arrangement to aquire all the issued and outstanding common shares of Caracal by a wholly-owned subsidiary.
Investment Canada Act approval was the final outstanding regulatory approval for the deal to close.
Caracal, a Canada-based international oil exploration and development company active in the Republic of Chad, now expected the effective date of the arrangement to be July 8. Caracal last month said the £5.50 a share cash offer was approved by 99.79% of the votes cast at a special shareholders meeting.
Glencore would release the funds to be paid to shareholders and holders of depositary interests on Monday.