Zimbabwe suspends platinum levy

THE Government has suspended the 5 percent levy on raw platinum exports after miners lobbied the Treasury for its removal citing its detrimental impact on operations and the commitment by industry players to build beneficiation facilities.

Finance and Economic Development Minister Mthuli Ncube revealed this during a recent interview with ZTN "The Mint Special" programme. He said the Government agreed with the reasoning presented by miners, hence the suspension of the levy.

The Chamber of Mines of Zimbabwe (CoMZ) confirmed yesterday saying the Government had communicated the decision to suspend the tax on unbeneficiated platinum exports pending further consultations with all stakeholders.

The Treasury announced the tax in 2020, giving the country's platinum miners two years to prepare before its planned introduction early this year.

The levy was aimed at cajoling the mining companies to develop domestic value addition facilities, as Zimbabwe sought to optimise returns from its vast platinum deposits. Platinum miners currently exportthe mineral to South Africa for refinement, largely in raw or semi-processed state, which the Government argues deprives the country of significant potential revenues.

"They wrote to me and gave me good reasons as to why this tax is not a good tax and that it is hurting investments. Certainly, in their arguments I was convinced and the Government was convinced and I also briefed His Excellence (the President).

"And we decided, as a Government, to remove or suspend that tax, so it's no longer applicable and this has been welcomed by the platinum industry ," Minister Ncube said. He said, though, this would need to be approved by Parliament.

"Because it's about a change in tax, it is always better to effect it in a Finance Bill Amendment, but that tax is not being collected by anyone," he said, adding he had directed the Zimbabwe Revenue Authority (Zimra) to stop collecting the tax.

CoMZ chief executive Isaac Kwesu confirmed that the Government had communicated the decision on suspension of the raw platinum export levy to allow further consultations within Government and among platinum players.

"Pending approval by Parliament and the Finance Bill, or a statutory instrument, it is correct that Zimra is currently not collecting the levy. They said it is suspended pending further consultation within Government and other stakeholders," Mr Kwesu said.

He, however, pointed out that the Government was still to make a conclusive decision on whether to completely remove the tax or maintain it simply as suspended for now.

Earlier in February this year, Platinum Producers Association chairman Alex Mhembere, in a letter to Minister Ncube, requested that the raw exports levy be deferred to allow miners time to build beneficiation facilities and grow stock feed volumes to economic levels.

Platinum is strategically important to the economy of Zimbabwe given that, together with gold, the two minerals generate more than half the foreign exchange inflows from the mining sector.

Zimbabwe, which has the third biggest known platinum deposits after South Africa, currently has three producing mines; Zimplats, a unit of South Africa's Implats, Mimosa Mining Company, co-owned by Implats and Sibanye Stillwater of South Africa and Unki Mine, a unit of Anglo-American.

Other platinum projects are at various stages of development include Great Dyke Investments, a joint venture between Zimbabwean and Russian investors, South African firm Tharisa Capital's fledgling Karo Resources project and Bravura, fronted by Nigerian investor Benedict Peters.

Mining is of strategic importance to Zimbabwe's short to medium term growth plans. The mineral rich Southern African country intends to grow mineral shipments from mining to US$12 billion by 2023 from US$2,7 billion in 2017.

Of the US$12 billion, gold, platinum diamonds will contribute US$4 billion, US$3 billion and US$1 billion respectively.

Chrome, iron ore and carbon steel are expected to contribute US$$1 billion while coal and hydrocarbons are projected to contribute the same value. Lithium at US$500 million while other minerals would generare US$1,5 billion.

Zimbabwe's platinum production registered a modest 6 percent growth to 475 000 ounces in 2021 although overall output is seen marginally lower this year.

The World Platinum Investment Council (WPIC) said output rose in Zimbabwe, from 448 000 oz in 2020, as the backlog of semi-finished inventory was processed through South African smelters and refineries.