INCOME AND MINING TAXES

9 Months Ended

Sep. 30, 2015

INCOME AND MINING TAXES

INCOME AND MINING TAXES

NOTE 7     INCOME AND MINING TAXES

The Company’s income and mining tax expense (benefit) differed from the amounts computed by applying the United States statutory corporate income tax rate for the following reasons:

	Three Months Ended September 30,								Nine Months Ended September 30,
	2015				2014				2015				2014
Income before income and mining tax and other items			$	437			$	25			$	1,158			$	260
Tax at statutory rate	35	%	$	153	35	%	$	9	35	%	$	405	35	%	$	91
Reconciling items:
Percentage depletion	(4)	%		(18)	(152)	%		(38)	(4)	%		(52)	(25)	%		(66)
Change in valuation allowance on deferred tax assets	(5)	%		(25)	(124)	%		(31)	5	%		57	(36)	%		(93)
Mining and other taxes	6	%		27	24	%		6	4	%		51	5	%		14
Tax impact on divestitures	2	%		7	32	%		8	1	%		7	8	%		21
Effect of foreign earnings, net of credits	1	%		6	—	%		—	2	%		26	3	%		8
Other	—	%		1	(3)	%		(1)	—	%		2	1	%		3
Income and mining tax expense (benefit)	35	%	$	151	(188)	%	$	(47)	43	%	$	496	(9)	%	$	(22)

A valuation allowance is provided for those deferred tax assets for which it is more likely than not that the related benefits will not be realized. In determining the amount of the valuation allowance, each quarter, the Company considers future reversals of existing taxable temporary differences, estimated future taxable income, taxable income in prior carryback year(s), as well as feasible tax planning strategies in each jurisdiction to determine if the deferred tax assets are realizable. If it is determined that the Company will not realize all or a portion of its deferred tax assets, it will place or increase a valuation allowance. Conversely, if determined that it will ultimately be able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. There are a number of risk factors that could impact the Company’s ability to realize the deferred tax assets.

The Company operates in numerous countries around the world and accordingly it is subject to, and pays taxes under the various tax regimes in the countries in which it operates. Some of these tax regimes are defined by contractual agreements with the local government, and others are defined by the general corporate income tax laws of the country. The Company has historically filed, and continues to file, all required income tax returns and pay the income taxes determined to be due. The tax rules and regulations in many countries are highly complex and subject to interpretation. From time to time the Company is subject to a review of its historic income tax filings and in connection with such reviews, disputes can arise with the taxing authorities over the interpretation or application of certain rules to the Company’s business conducted within the country involved.

At September 30, 2015, the Company’s total unrecognized tax benefit was $98 for uncertain income tax positions taken or expected to be taken on income tax returns. Of this, $35 represents the amount of unrecognized tax benefits that, if recognized, would affect the Company’s effective income tax rate.

As a result of the statute of limitations that expire in the next 12 months in various jurisdictions, and possible settlements of audit-related issues with taxing authorities in various jurisdictions, none of which are individually significant, the Company believes that it is reasonably possible that the total amount of its net unrecognized income tax benefits will decrease by approximately $50 to $55 in the next 12 months.