Advocate Thabani Mpofu wins at the Supreme Court again

The Supreme Court has dismissed an appeal by the Zimbabwe Revenue Authority (Zimra) in a long-running legal battle over whether ferrochrome producer Zimasco (Pvt) Ltd is liable to pay mining royalties on chrome ore concentrates and ferrochrome.

The ruling, delivered by Justices Chinembiri Bhunu, George Chiweshe and Joseph Musakwa, upheld an earlier High Court decision in favour of Zimasco, a Midlands-based company owned by Chinese state-run giant Sinosteel. The judges said the appeal had no merit and ordered Zimra to pay costs, with full reasons for the ruling to be released later.

"In light of the foregoing, it is manifest that the appeal lacks merit. The court a quo correctly interpreted the governing statutory provisions. It correctly characterised ferrochrome as a non-mineral, and correctly concluded that in the absence of a prescribed royalty rate for mineral-bearing products during the relevant period, no liability to pay royalties could arise," the bench said.

The matter stemmed from a challenge lodged by Zimasco at the High Court, where Justice Paul Musithu ruled that chrome ore concentrates and ferrochrome alloy are not minerals but "mineral-bearing products," and therefore do not attract mining royalties.

"The applicant (Zimasco) did not sell the chromite ore that it extracted from the earth. Prior to January 2022, the Minister (of Mines) had not fixed rates of royalties in respect of mineral-bearing products, and for that reason the applicant was not obliged to pay royalties for the chrome ore concentrates and ferrochrome alloy which it disposed during the period 1 January 2019 to 30 September 2022," Justice Musithu said in his ruling.

He added that while royalty rates were set for minerals, no such rates were prescribed for mineral-bearing products. As a result, Zimra could not unilaterally extend existing mineral royalty provisions to products like ferrochrome, which are derived from but distinct from minerals.

Zimasco had sought a declaratur and relief from paying royalties, arguing that its products fell outside the statutory definition of minerals. Zimra, however, maintained that the products should be classified as minerals and thus attracted royalty obligations.

The Supreme Court ruling brings clarity to an issue with significant financial implications for chrome miners and the tax authority, given Zimbabwe's heavy reliance on mining revenues.

Zimasco was represented by Advocate Thabani Mpofu, while Zimra was represented by Simplicio Bhebhe.