Rio Tinto pays historic tax settlement, Kelsian walks from deal with Go-Ahead and BHP accelerates potash project

Mining giant Rio Tinto (ASX: RIO) has agreed to hand over almost $1 billion in unpaid taxes in what is deemed to be one of the largest tax settlements in Australian history.

Rio Tinto will pay the Australian Tax Office (ATO) an additional $613 million to settle disputes over its financing arrangements and marketing hubs in Singapore, on top of the $378 million it has already paid over the same dispute.

The miner was using Singapore as a marketing hub of products, including aluminium and iron ore in an attempt to reduce Australian tax bills, commonly referred to as ‘transfer pricing’.

Rio Tinto chief financial officer Peter Cunningham said the company is pleased to resolve the ongoing disputes and welcomes the clarity on future tax outcomes in Singapore.

“Rio Tinto remains committed to our commercial activities in Singapore and the valuable role played by our centralised commercial team,” he said.

Link Administration

Link Administration (ASX: LNK) has announced it has agreed to a revised takeover proposal by Dye & Durham, with its board set to recommend shareholders support the offer of $4.81 per share.

The revised takeover also includes up to $0.13 per share if the banking and credit management business is sold and proceeds are received within 12 months of the deal.

While the deal is down from $5.50 per share which was offered in December, it is an improvement from the bid earlier this month of $4.70 per share.

The Australia-based company has urged its shareholders to accept the offer, stating it is in their best interests.

The accepted offer is the third takeover attempt from Dye & Durham, which first took an interest in the company in late 2021 after two failed takeover attempts by US equity firm The Carlyle Group.

The takeover is not yet complete and is subject to an independent expert, court approval and regulatory approvals from the Australian Competition and Consumer Commission (ACCC) and the UK Financial Conduct Authority.

BHP

BHP (ASX: BHP) has announced it aims to accelerate efforts to finish construction at its $5.7 billion Jansen potash project in Canada, as high gas prices and sanctions on key exporters continue to disrupt global supplies of fertilisers.

The world’s largest miner had set its sights on 2027 to begin stage one production at the Jansen potash project, but BHP is now hoping to bring that date forward one year to 2026.

The company also wants to bring forward stage two where it would expand to an additional production capacity of 4 million tonnes per year, at a capital intensity of between $800 and $900 per tonne.

BMO Capital Markets Fertilisers and Chemicals analyst Joel Jackson said while BHP’s ambitions aren’t out of sight, they remain distant.

“BHP is trying to accelerate first tonnes at Jansen, but it still seems best case is first tonnes come late 2026 with a two-year ramp,” he said.

BHP anticipates potash demand will increase by 15Mt to 105Mt by 2040, with global population and pressure to improve farming yields given limited land supply.

Paladin Energy

Paladin Energy (ASX: PDN) has announced it aims to restart production at the mothballed Langer Heinrich uranium mine in Namibia, with first volumes targeted for early 2024.

The Western Australia-based uranium production company will conduct general repairs to the existing plant, while aiming to improve its efficiency.

Paladin chief executive officer Ian Purdy said the decision to restart the mine is backed by a strong uranium market along with the company’s current offtake agreements.

“The Langer Heinrich mine remains a low-risk, robust, long-life operation that is poised to take advantage of the improving uranium market conditions and deliver sustainable value creation for all our stakeholders,” he said.

The company also announced the capital expenditure for the restart has increased from US$87 million (A$126 million) to US$118 million (A$170 million) as a result of surging prices for labour, equipment and raw materials.

Paladin has also appointed Africa-focused engineering company ADP Group to complement its in-house capabilities and ensure Langer Heinrich is delivered to production.

Infratil

Infratil (ASX: IFT) has announced investee business Vodafone NZ has agreed to sell passive mobile tower assets for NZ$1.7 billion (A$1.5 billion) to two global investors.

InfraRed Capital Partners and Northleaf Capital Partners will each obtain a 40% stake in the new entity, TowerCo, with Infratil to buy a 20% stake.

Infratil said TowerCo would host 1,484 mobile towers and has the potential to be the largest New Zealand towers business, covering roughly 98% of the nation’s population.

TowerCo will enter a 20-year master services agreement with Vodafone NZ to provide Vodafone with access to existing and new towers, building at least 390 additional sites over the next 10 years.

The deal is expected to close in the fourth quarter of calendar 2022, subject to approval from Canada’s Overseas Investment Office.

Kelsian

Australian transport services business Kelsian (ASX: KLS) has reportedly abandoned its pursuit of transport operator Go-Ahead due to market volatility.

The company said the decision came as a result of Australian equity markets being volatile, on top of external events which saw its share price affected when the news was first announced.

“The Kelsian Board consider that Australian equity market conditions at this time do not enable Kelsian to pursue a possible transaction for Go-Ahead despite the long-term strategic and economic rationale of the potential transaction for Kelsian,” it said.

Kelsian Group shares rose on the news that the company would be walking away from the $1.5 billion takeover deal, quashing the deal which had been in talks since early June.