Zimbabwe could rethink 15pct platinum tax after receiving “credible” refinery plans – minister

Zimbabwe could rethink 15pct platinum tax after receiving “credible” refinery plans – minister

By Bernard Mpofu, June 10 (The Source) – Mines minister Walter Chidakwa has hinted that the government could consider scrapping a 15 percent export tax on unrefined platinum after two major miners submitted plans for local processing, as the industry blames the levy for declining output and earnings.

Government introduced a 15 percent tax on platinum ore exports in a bid to compel local processing of the white metal, which accounts for nearly 60 percent of Zimbabwe’s total mineral shipments. Currently, all three platinum miners in the country – AngloPlats’ Unki, Impala’s Zimplats and Mimosa, Aquarius’ JV with Impala, all send their matte for refining in South Africa.

The industry has argued that Zimbabwe’s current output, just over half a million ounces, can hardly sustain refining facilities that would require investment of about $2 billion, especially at a time when metal prices are depressed.

The government in 2013 proposed a 15 percent export levy on unprocessed platinum from January 1 this year, with a view to encouraging platinum mining companies to invest in smelting and refining capacity in Zimbabwe.

Chidakwa said two mining firms—Unki and Mimosa had presented plans to government which seek to boost the current smelting capacity at the country’s largest platinum miner Zimplats.

He said government is also considering a proposed plan to process the mineral at Bindura Nickel Corporation, whose smelter facilities can be retrofitted to process the mineral.

Chidhakwa said technical teams in his ministry were assessing the plans before he and finance minister Patrick Chinamasa could present them to Cabinet.

“If Cabinet is happy with the plans, then naturally the minister will then be empowered or mandated to take away the (15 percent) export tax and enable the companies to work on the plans they presented to us. So there is something happening,” Chidakwa said.

Chinamasa is next month expected to announce his mid-term fiscal policy, amid expectations of tax reforms to stimulate economic activity.

Zimbabwe holds the world’s second-largest platinum reserves after South Africa and hosts the world’s top two global producers of the metal.

Industry players say with platinum prices already depressed, the tax would eat into the profits of companies with platinum assets in the country.