Accusations fly as iron ore wars get nasty
UPDATE 3.25pm: Fortescue Metals Group (FMG) has accused its multi-national competitors of “backgrounding” the media against it.
The claim follows a report in the Australian Financial Review this morning that FMG had set up a Singaporean company similar to the so-called “marketing hubs” set up by BHP Billiton and Rio Tinto, which enabled the mining giants to minimise their tax liabilities in Australia.
But FMG said in a statement this morning the Singapore company referred to was established specifically to invest in the China Beijing International Mining Exchange.
“It has undertaken no other activity,” the company said.
“Fortescue is proud of its record of not transferring profits overseas and paying its full share of tax and royalties to Australia.”
In a follow up statement from FMG this afternoon, chief financial officer Stephen Pearce accused FMG’s multinational competitors of backgrounding the media on its Singapore investment company.
“In doing so, they are trying to falsely insinuate that FMG is contemplating certain behaviour by multinationals that was the subject of the Senate inquiry and remains under the scrutiny of the ATO,” he said.
FMG said it had revealed full details of its international operations in its submission to the Senate Economics References Committee dated January 29 this year and that a copy of the submission was on the public record.
“Fortescue confirms that it pays the applicable tax rates in the countries that it operates and that all income earned by those subsidiaries is then attributed back to Australia and applicable tax paid,” the company said.
FMG’s executive chairman Andrew Forrest has recently attacked Rio’s and BHP's Singapore marketing hubs, labelling them as "tax shelters".
The two companies are understood to channel revenue from their Australian operations through Singapore, where a sharply lower company tax rate applies.
Mr Forrest recently supported calls for a parliamentary inquiry to investigate claims the mining majors were deliberately lifting iron ore production while the price of the commodity plunged in a bid to drive smaller, higher-cost competitors to the wall.
The Federal Government has rejected such a probe despite initially supporting the move earlier this month.
It has since been speculated that at least two big Chinese companies may be interested in taking a stake in Fortescue.
Shares in FMG rose as much as 11 per cent yesterday in response to those reports.
The company said it was not aware of any applications concerning Chinese interests to the Foreign Investment Review Board but did not rule out talks with third parties.
Today, FMG shares closed down four cents, or 1.67 per cent, at $2.36.
