Mining & Energy
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The Mozambican Tax Authority (AT) is considering whether the sale by the Brazilian company Vale of shares in its Mozambican operations to the Japanese company Mitsui is liable to capital gains tax, according to Monday’s issue of the Maputo daily “Noticias”.
Mitsui agreed, in 2014, to pay US$763 million for a 15 per cent stake in Vale’s open cast coal mine at Moatize and a 35 per cent stake in the new mineral port at Nacala-a-Velha, on the northern coast, and the Nacala-Moatize railway. But this deal only received final approval from the Mozambican government last week.
Vale’s expectation, the paper says, is that this sale of shares should not attract capital gains tax, since it is not profitable in itself, but merely seeks to complete the investments required to make coal mining at Moatize viable.
The AT does not necessarily share this view. Speaking to reporters on Friday, the AT’s general director of taxes, Augusto Tacarindua, said the Vale-Mitsui arrangement is still being assessed.
“The process is under way, and in due time we will give precise information”, he said. “If there are capital gains, then naturally they will be taxed”.
Vale is currently running its Mozambican operations at a heavy loss. According to the company’s accounts published in February, the Moatize mine is costing Vale 500 million dollars a year. Nonetheless, Vale shows no sign of pulling out of Mozambique, and has expressed a continued interest in Mitsui investing in its Mozambique projects.
Clearly Vale believes that international demand for coal will rise, and the coal price will eventually recover, thus making it possible to recoup the money it has spent on the Moatize mine and on the port and rail infrastructures.Source: AIM
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