Rio Tinto: Mozambique seeks tax on Benga

Mozambique’s government is in talks with Rio Tinto over capital gains tax on the company’s $4.2 billion (about R45bn now) acquisition of Benga coal mines from Riversdale Mining in 2011. “The Riversdale-Rio Tinto business is still on the table,” Mozambique Tax Authority president Rosario Fernandes said on Tuesday. “At some stage they have to follow local law” as the acquisition involved mining assets in the country, she said. Rio Tinto spokesman David Outhwaite said the company had complied with all applicable tax legislation. A company report published earlier this month said Rio Tinto had paid $4 million in tax to Mozambique last year out of a total tax bill of $7.5bn for 2013. The second-biggest mining company last year wrote down the value of the Mozambique assets by $3bn, citing transport constraints and a cut to recoverable coking coal estimates. The government rejected Rio Tinto’s proposal to boost shipments from the Benga mine by barging coal down the Zambezi River. Fernandes said Mozambique expected to more than double the $1.3bn it raised from capital gains tax on five deals since 2012 with another 10 transactions pending. Anadarko Petroleum had paid tax of $520m after selling its 10 percent stake in a Mozambique gas field to ONGC Videsh, a unit of India’s biggest energy explorer, the tax authority said. – Bloomberg