The Government's plan to continue taxing the natural resources sector at 25 per cent beyond 2003, double the proposed corporation tax rate of 12.5 per cent of other industries, will be re-examined before the next budget.
The Taoiseach, Mr Ahern, gave the commitment yesterday at the official opening of the Lisheen Mine near Thurles, Co Tipperary. He was commenting after Mr Julian Ogilvie Thompson, the chief executive of Anglo American, the joint venture operator with Ivernia for Lisheen, said he hoped for a favourable outcome on the proposals put to Government by the oil, mining and gas industry.
Mr Ahern said the natural resources sector received high capital allowances, and was effectively able to write off all its capital allowances against tax. The case had been made, particularly for quarrying businesses, that the same corporation tax rate should apply across all industry.
A strategic examination of the sector would be carried out before the next budget. "They have made a proposal that they will pull back on their capital allowances on the basis that consideration be given so that they would receive a 12.5 per cent rate," he said.
Mr Don Cunningham, the general manager of the Lisheen Mine, questioned why the industry should be taxed at double the rate of other industries. "We should see equalisation of taxation," he said. Mr David Hough, managing director of Ivernia, said the industry was not grant aided and the capital allowance of 120 per cent had been an exploration incentive. "If they want to claw back on that, we would certainly be prepared to negotiate it."
He discounted speculation that Ivernia would be open to a takeover by Anglo American, saying that there were "a number of majors out there who would like to have what we have". "We have not had any discussions. We are not for sale," he said. The company's profile would be raised when it received a listing on the Toronto Stock Exchange. This was likely to be in September.
It would automatically become part of the portfolios of institutions there, being valued in the top 300 of companies on the index.
Mr Damian Roddy, of ABNAmro, said that based on the current zinc price, the stockbrokers had a price target of 150 cents (£1.18) on Ivernia's share. It currently trades at around 70 cents.
Lisheen is expected to be in full production by December, after starting the mining of zinc and lead concentrate in September. At full production, it will employ 300 people and is expected to have a 14-year life span.
