It has emerged in Brazil that the country’s number one – and world number two (by market capitalisation) – mining group, Vale, last month paid the Brazilian Federal Revenue service (Receita Federal, or RF) 5.8-billion reais (R$) in back taxes.
R$5.8-billion is equivalent to some $3.63-billion, or about R26.28-billion (the reais:dollar and reais:rand exchange rates respectively), and this payment caused a 21% jump in the RF’s tax collection for July, setting a monthly record for the agency, whose nickname in Brazil is ‘the Lion’ (presumably because of its ferocity and allegedly voracious appetite).
The taxes were paid on July 29. The company stated, in its report on its performance during the second quarter of this year, that there would be “no impact on our liquid profit, given the existence of a provision [for the tax] on thcoal vibrating sizing screen picturese balance [sheet]”.
Officially, for reasons of fiscal confidentiality, the RF will not identify the company that paid the R$5.8-billion, saying only that it was paid by a “contributor” in the “mineral extraction area”. However, that the money came from Vale was obvious from the statements in its quarterly report and the company confirmed the payment to Folha.com, the online news site of the Folha media group.
This all arose out of a legal dispute between Vale and the RF. Brazil has a tax called the Contribuiçãimport chinese construction equipment into canadao Social sobre Lucro Líquido (CSLL) – literally, the Social Tax on Liquid Profit.
Vale argued that the RF should not include the company’s export revenues in the calculation of the CSLL it would have to pay. The case went to the Supreme Federal Court (Supremo Tribunal Federal – STF), which ruled in favour of the RF. The STF handed down its ruling in August 2010, and thereafter it was simply a matter of arranging the date for the payment.
Meanwhile, on the other side of the world, mining compressors south africathe Chinese Ship Owners Association has attacked Vale’s programme of creating a fleet of very large ore carriers (VLOCs) to convey its iron-ore from Brazil to the Asian country as an “attempt at monopoly”.
Vale is setting up a fleet of 35 VLOCs, the biggest ever built, each of which will be able to carry 400 000 t of iron-ore; 19 of these will be owned and operated by Vale itself and the remaining 16 by other companies, but which will be exclusively contracted to Vale on long-term charters.
The first of these ships, the Vale Brstone crushing companies price in nigeriaasil, is already in service.
CSA vice-chairperson Zhang Shouguo asserted to the Bloomberg News Agency recently: “The transport service should be borne by the transport company. For Vale to do so would take away most of the shipping business. Vale has taken control of the iron-ore prices and now the [company will] also control the shipping price.”
The CSA is lobbying the Chinese government to take undisclosed steps against Vale’s new ships.
However, it should be pointed out that while the <feldspar processing equipmentem>Vale Brasil was being built, and another six of the company’s VLOCs are being and will be built by Daewoo Shipbuilding & Marine Engineering, of South Korea, the remaining 12 will be built by Rongshen Shipbuilding and Heavy Industries, of China.
And reduced iron-ore transport costs are in the interest of the Chinese steel industry.
Vale has denied any intention of monopolising the iron-ore trade between Brazil and China and stated that the purpose of the new fleet is to reduce the disadvantages it faces compared to its rivals, which ship iron-ore to China from Australia.
As this is a much shorter distance than that from Brazil to China, these competitors (predominantly BHP Billiton and Rio Tinto) have significantly lower transport costs and can offer their products at lower prices on the Chinese market.
It should also be remembered that Vale has been in the shipping business for decades, and is, indeed, one of Brazil’s biggest transport companies, if not the biggest, operating major railway networks and important ports as well as ships.