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Cape Town - In response to Fin24's article Miners never received 22% increase, African Rainbow Minerals [JSE:ARI] (ARM) CEO Mike Schmidt said reference is made in the context of South African companies accruing profits to offshore entities by under-invoicing the cost of sales of minerals to offshore entities and therefore avoiding local taxes and disenabling the South African companies from being able to pay higher wages to their workers.
ARM, which like several other mining companies operating in South Africa, has holdings abroad, pointed out on Monday that neither it nor its South African subsidiaries sell minerals to Barbados companies in which it retains an interest.
These companies, ARM points out, are “largely dormant”.
Unlike several other companies that researchers have been investigating, ARM was quick off the mark to explain its Barbados holdings. They were previously part of the Toronto listed Teal Exploration and Mining group in which ARM once had a 65% holding.
Said Schmidt: "These allegations are false and defamatory and ARM wishes to rectify these statements:
1. The Barbados registered companies are part of the Teal Exploration and Mining Incorporated (Teal) structure, which was previously listed on the Toronto Stock Exchange. We assume that the Barbados companies referred to in the article are companies which formed part of that Toronto listed structure, of which ARM used to own 65%.
2. In 2009 Teal was delisted from the Toronto Stock Exchange and the Brazilian diversified mining company Vale S.A. acquired 50% of Teal. This resulted in ARM’s interest in all but one of the Barbados companies being reduced to 50%.
3. Neither ARM nor its South African subsidiaries or other associated South African companies sell minerals to any of the Barbados companies or conclude any other transactions with those companies which have the effect of relocating profits from the ARM South African subsidiaries or other associated South African companies to those Barbados companies. In any event, the Barbados companies are largely dormant."
The Scandinavian economist Dick Forslund, working for the Cape Town based Alternative Information and Development Centre, recently listed a number of mining companies that retain foreign subsidiaries. Forslund has raised questions about prices recorded locally for sales of platinum against the going price for the metal at the time of the sales. The difference, he says, indicates either “poor salesmanship or something else”.
However, ARM has never been listed among companies accused of selling under-invoiced minerals through subsidiary companies. But the fact that various companies retain foreign subsidiaries has raised the prospect of these being used to evade tax within South Africa.
Allegations of possible under invoicing have been voiced about leading platinum group metal producers, all of whom have links abroad. So far, however, these have neither been verified nor challenged.
ARM, which like several other mining companies operating in South Africa, has holdings abroad, pointed out on Monday that neither it nor its South African subsidiaries sell minerals to Barbados companies in which it retains an interest.
These companies, ARM points out, are “largely dormant”.
Unlike several other companies that researchers have been investigating, ARM was quick off the mark to explain its Barbados holdings. They were previously part of the Toronto listed Teal Exploration and Mining group in which ARM once had a 65% holding.
Said Schmidt: "These allegations are false and defamatory and ARM wishes to rectify these statements:
1. The Barbados registered companies are part of the Teal Exploration and Mining Incorporated (Teal) structure, which was previously listed on the Toronto Stock Exchange. We assume that the Barbados companies referred to in the article are companies which formed part of that Toronto listed structure, of which ARM used to own 65%.
2. In 2009 Teal was delisted from the Toronto Stock Exchange and the Brazilian diversified mining company Vale S.A. acquired 50% of Teal. This resulted in ARM’s interest in all but one of the Barbados companies being reduced to 50%.
3. Neither ARM nor its South African subsidiaries or other associated South African companies sell minerals to any of the Barbados companies or conclude any other transactions with those companies which have the effect of relocating profits from the ARM South African subsidiaries or other associated South African companies to those Barbados companies. In any event, the Barbados companies are largely dormant."
The Scandinavian economist Dick Forslund, working for the Cape Town based Alternative Information and Development Centre, recently listed a number of mining companies that retain foreign subsidiaries. Forslund has raised questions about prices recorded locally for sales of platinum against the going price for the metal at the time of the sales. The difference, he says, indicates either “poor salesmanship or something else”.
However, ARM has never been listed among companies accused of selling under-invoiced minerals through subsidiary companies. But the fact that various companies retain foreign subsidiaries has raised the prospect of these being used to evade tax within South Africa.
Allegations of possible under invoicing have been voiced about leading platinum group metal producers, all of whom have links abroad. So far, however, these have neither been verified nor challenged.
