Las Bambas cancels debts of 2011 and 2012: it will prosecute the case to recover the money

The board of directors of the china MMG Limited, parent company of Las Bambas, announced the payment of US $ 170 million 660 thousand 389 to the National Superintendency of Customs and Tax Administration (Sunat) for fines and interest inherited from its operations in 2011 and 2012, when it was in hands of Glencore.

The amount, equivalent to S / 685 million, represents an approximate saving of S / 70 million to the company, due to the volatility of the exchange rate, which today rebounds above S / 4. If it had done so, for example, At the end of 2020 (when the exchange rate was S / 3,619, despite the pandemic), it would have paid around US $ 190 million.

According to the company’s statement, the amount to be paid is related to the period prior to closing under the share purchase agreement entered into with Glencore plc with respect to the Las Bambas project in July 2014. The Peruvian Tax Court had advanced that the debt was in the stage of “enforcement measures”.

However, Las Bambas aims to get his money back, and for this reason he has appealed the initial decision of the Tax Court before the Judiciary. This process is ongoing and it is noted that appeals in the Peruvian system can take several years to resolve.

“Las Bambas may seek reimbursement of part or all of the amount from Glencore plc for compensation or warranty claims. by virtue of that agreement once the matter is finally resolved by the Peruvian Judicial Power ”, says a statement with the signature of Gao Xiaoyu, executive director and CEO of MMG Limited.

“Shareholders and potential investors of Las Bambas are advised to be cautious when trading the company’s shares,” he adds.

Las Bambas, transferred in 2014 from the Swiss Glencore to MMG, of Chinese capital, for about US $ 10,000 million, is located in the province of Cotabambas, in the Apurímac region, at 4,000 meters above sea level.

The deposit has reserves estimated at 6.9 million tons of copper, of which 452,000 were extracted in 2018, which represents 2% of the 20 million tons that were produced worldwide.

Las Bambas: MMG pays Glencore debt

In 2011 and 2012, Las Bambas, owned by the Swiss Glencore Xstrata, invested heavily in the purchase of goods and services, with a view to building its operations center in Apurímac. In 2014 it passed into the hands of the Chinese MMG.

The purchases and services of processing mills, pipes and other facilities of its concentrator plant were accredited in a “reliable” way by Sunat, for which it was responsible for the return of the VAT under the current regime. An audit was also carried out by Activos Mineros.

“However, despite the aforementioned, after an audit in 2015, Sunat observed the tax credit of said purchases, arguing that the documentation presented was not sufficient and requested Las Bambas to refund the amounts returned by IGV” explained the miner.