Ruby company says its finances are fully transparent – Mozambique

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Ruby company says its finances are fully transparent – Mozambique

7:25 CAT | 10 May 2018

Montepuez Ruby Mining (MRM), the company that operates the world’s largest known deposit of rubies, in Montepuez district, in the northern Mozambican province of Cabo Delgado, has claimed that its revenue and tax payments are entirely transparent.

The latest statement from MRM responds to recent (unnamed) studies, which the company claims were “not fully correct and lead to ambiguous conclusions”.

MRM is a company of the Gemfields group, which is now 100 per cent owned by the London-based firm Pallinghurst Resources. Since Pallinghurst is quoted on the Johannesburg Stock Exchange, the MRM release says, the data on its sales are publicly available.

To date, the release says, 26 per cent of MRM’s total revenue has been paid to the Mozambican government in corporate taxes and production royalties. The royalties are ten per cent of the revenue from the sale of rubies, and from 2014 to 2016 they amounted to around 7.5 million US dollars a year, before rising sharply 11.5 million dollars in 2017.

The release adds that MRM was the largest taxpayer in Cabo Delgado in 2015 and 2016. In the first half of 2017, MRM says it paid corporation tax of 41.4 million dollars.

There are, however, discrepancies in the records of tax payments provided by MRM and by the relevant Mozambican government departments. According to the latest report from the Extractive Industry Transparency Initiatives (EITI), in 2015 there was a discrepancy of 8.21 per cent: the payments which the company recorded as making were 43.4 million meticais more than the government departments recorded receiving.

In 2016, the discrepancy was much smaller, at 0.22 per cent, and this time the company said it had paid 4.2 million meticais more than the state had recorded receiving.

Such discrepancies are not unusual in EITI reports. The MRM release said “there is no material reason for any discrepancy in the data between EITI and the Mozambican government departments, but any discrepancy should be reconciled between these two interested parties”.

MRM claims that in its auctions Gemfields operates a level of transparency “unprecedented in the industry of precious stones”.

“The prices obtained through competitive bidding are announced via the stock exchange and are published online for all to see”, MRM says. The auctions are witnessed by government tax officials and any unsold items “are tracked in a transparent manner and declared publicly at the end of each auction”.

MRM says it is fully compliant with Mozambican mining legislation, and the income from all the sales of rubies is deposited, in hard currency, in MRM accounts held in Mozambican banks.

The company adds that, to date, it has invested 1.7 million dollars in community and social responsibility projects, which are discussed with and approved by the local and provincial governments before implementation.

Among these projects, it says, are the establishment of a mobile clinic, in partnership with the Ministry of Health, which serves six villages in Montepeuez district, and has been successful enough to ensure that second mobile clinic will soon be launched.

MRM says it has also provided “significant financing” for wildlife conservation efforts, in the two main conservation areas near the ruby mine, the Quirimbas National Park and the Niassa National Reserve.

Source: AIM