The argy bargy around failing and soon to fail miners is intensifying. Last week we were treated to some rippingly self-serving comments from Cliffs’s CEO but today he takes a more admirable stand, from The Australian:
Cliffs Natural Resources has refused to be part of the West Australian government’s royalty relief program…
…“I do not support that kind of thing … it’s an unfair subsidy from the government,” Mr Goncalves said.
Good for you! Sadly, investors in Cliffs might hang their heads a little deeper, from the WSJ:
Activists have gotten bolder in terms of targets, with even a giant like Apple fair game these days.
But taking on China? That is what Casablanca Capital did, albeit indirectly. In January 2014, the fund said that it had taken a 5.2% stake in iron-ore miner Cliffs Natural Resources. At the time, Cliffs shares traded at about $19, and Casablanca had paid about $25 a share for its stake. But it said that, under its plan, they could be valued at $53.
On Friday, the stock closed at less than $5. Casablanca actually won its proxy fight last year and installed a host of directors and a new chief executive, Lourenco Goncalves. Yet its plan to split Cliffs looks beside the point given a roughly 50% decline in iron-ore prices the past year.
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Capital Group at Fortescue take note!
Meanwhile, RIO has released a tax paper that seeks to serve many masters, but the two most outstanding are to illustrate tax transparency and fend off Glencore, from The Australian:
MINING giant Rio Tinto delivered $6.2 billion in taxes and mining royalties to governments in Australia in 2014, an increase on the previous year despite the significant fall in commodity prices.
Rio’s fifth taxes paid report, released today, shows the company’s global tax and royalty contribution was $US7.1bn in 2014, with the bulk paid to governments in Australia. Rio employees paid a further $1.8bn in personal taxes.
Tax and royalty payments included a record $2bn to the West Australian government on increased production at Rio’s Pilbara iron ore mines in the state.
Not for much longer…And from the AFR:
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Pressure has been growing on the mining industry to be more transparent and there has been a big focus in recent months on the opaque state of Glencore’s tax affairs.
Its tax affairs in Australia are difficult to map largely because it has more than 200 holding companies here. But Glencore has said it is working on streamlining the complicated corporate structure of its Australian business, which is partly a legacy of its 2013 takeover of Xstrata.
Mr Lynch said Rio’s annual 20-page taxes paid report was “important evidence of our commitment to taxation transparency”.
As I say, with RIO’s profits likely to evaporate in the next two years as iron ore plumbs new depths, GLEN can come again with a takeover offer and the only local defense will be this tax issue. Pertinent preparations therefore.
