Johannesburg - Kumba Iron Ore fell to the lowest in seven weeks in Johannesburg trading after Africa’s biggest producer of the steelmaking material said it faces an additional tax liability of more than R1 billion ($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 R1 billion excluding potential interest and penalties, should the producer be assessed on this basis, the Pretoria-based Anglo American unit said in a statement on Tuesday. This relates to Sishen Iron Ore, 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 R5.5 billion for the 2006-10 tax years, which includes R3.7 billion 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 on Tuesday.
The stock dropped as much as 5.7 percent to R125, the lowest intraday level since July 27.
A field audit for the 2012 and 2013 tax years is under way, it said.
BLOOMBERG