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Platinum miners cry foul over tax

GOVERNMENT will soon pronounce measures to address miners’ concerns regarding the impact of the 15 percent tax on raw platinum exports after Cabinet received submissions on the industry’s outcry regarding the tax’s effect on viability.

Minister of Mines and Mining Development, Walter Chidhakwa
Minister of Mines and Mining Development, Walter Chidhakwa

Industry sources said this, however, comes amid concerns in industry that Finance Minister Patrick Chinamasa’s policy was silent on the contentious issue.

Platinum mining firms are levied 15 percent on gross proceeds from their exports as part of Government’s strategy to nudge them to refine platinum.

“The Minister of Mines and Mining Development, Walter Chidhakwa, has assured platinum miners that pronouncement on the issue is due soon. The minister has submitted a request for deferment of the tax,” said a source.

This comes as it emerged that platinum miners had come up with a position committing to fulfil Government’s demands on value addition of platinum, one of Zimbabwe’s biggest exports.

Minister Chidhakwa earlier demanded platinum miners to demonstrate tangible evidence of their commitment to Government’s value addition thrust.

“The miners have since submitted a detailed industry plan, board resolutions and a memorandum of understanding on value addition and beneficiation. But the Budget was silent on the export levy,” the source said.

The levy is meant to ensure the country derives maximum benefits for the export of its minerals and also anchor growth targets under the Zim-Asset policy.

Miners say the impact of the 15 percent levied on gross proceeds of raw platinum is compounded by the decline in the price of the precious metal on global markets due to a fall in demand by leading consumer China.

The global price of platinum declined to US$900 per tonne in the quarter to June from US$1 400 a tonne, a position which miners say affects viability.

Reached for a comment on Friday, Mines and Mining Development Minister Walter Chidhakwa said he was out of the country and had not had time to look go through contents of the finance minister’s mid-term policy.

Efforts to get his comment on the issue were not successful by the time of going to press yesterday. But The Herald Business is reliably informed that a position would soon be announced after Cabinet deliberated on the topical issue.

The minister told the miners’ AGM in May that the levy was imposed due to lack of progress towards beneficiation of platinum, but stressed that he was not happy about the fact that the producers had stopped exports.

This came after platinum miners, namely Mimosa Mining Company, Zimplats and Unki, had suspended exports in April citing the impact of the 15 percent tax on the viability of platinum mining operations in Zimbabwe.

The mines minister called on Zimra to enable the miners to “export so that we are able to get money and that if we have not finalised (setting up of beneficiation and value addition facilities) they can then charge the 15 percent”.

Mining, which registered modest growth in the first half, is expected to drive the projected 1,5 percent national economic growth this year in light of the 8,2 projected decline in agriculture, seriously affected by poor rains.

Failure to stimulate mining, especially gold and platinum which account for about half the country’s mineral exports, could affect economic growth.

Implats, the South African based majority shareholder of Zimplats, recently said it was in discussions with Government over the export levy.

Its joint venture partner in Zimbabwe’s oldest platinum miner, Aquarius, in February said it had suspended $70 million expansion at Mimosa over the tax. The Herald