Glencore to close Singapore marketing hub

Glencore says it will stop funnelling sales from its Australian coal operations through Singapore, a move that comes amid growing concern in Canberra about the impact that alleged tax avoidance by multinational mining companies is having on the country's tax take.

The Swiss company made the disclosure on Friday to an Australian parliamentary inquiry scrutinising the use of Singapore marketing hubs by BHP Billiton, Rio Tinto and Glencore to reduce the mining groups' tax bills.

BHP and Rio told the Senate committee they are among 15 companies being audited by the Australian tax office over their own marketing hub operations in Singapore.

"Australia coal sales will now be done directly from our Australian companies to end customers," Glencore said - a decision it said was made following its merger with Xstrata in 2013, now that it has integrated Xstrata's coal marketing business into its overall global marketing.

BHP, Rio and Glencore have each denied they are engaged in aggressive tax avoidance strategies. Rio and BHP told the committee they had set up marketing hubs in Singapore not to pay less tax but to be closer to customers.

The Australian Senate inquiry is the latest in a string of legislative hearings in the US, UK and elsewhere in response to public anger over tax avoidance strategies used by multinationals at a time when national budgets are stretched.

It comes amid growing political unease in Australia, which is heavily reliant on corporate tax revenues. Company tax accounts for 19 per cent of total tax takings, compared with an average of 8.5 per cent across OECD countries.

Glencore told the committee that almost half its Australian exports flow through Singapore, a low-tax jurisdiction that is also used by technology companies Microsoft, Apple and Google.

Glencore's disclosure that it will in future sell its coal direct from Australia follows a clear signal this week from Joe Hockey, Australia's treasurer, that he would block any formal takeover proposal made by the Swiss miner for Rio Tinto - one of the biggest corporate taxpayers in Australia - due to concerns such a move would undermine the country's tax base.

In October, Glencore revealed that it had been rebuffed in an informal merger approach to its larger rival Rio Tinto some months earlier. Under UK takeover law it was barred from any further discussions with the Anglo-Australian mining group for a full six months - a period that expired this week.

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"It certainly does create an exposure that other countries do not have and we need to be mindful of that," he said. "Increasingly [tax] does form part of the consideration for approvals."

Senators reacted angrily on Friday when BHP refused, citing commercial sensitivity, to reveal how much revenue was transferred to Singapore from Australia or how much tax was paid in Singapore.

Committee chairman Sam Dastyari said he would seek legal advice on the matter.

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