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Chrome ore concentrates are not minerals, rules Zimbabwe High Court

by Staff reporter
20 Sep 2024 at 09:16hrs | Views
High Court Justice Siyabona Paul Musithu has issued a landmark ruling that could significantly affect the financial landscape for chrome miners in Zimbabwe. The court has determined that chrome ore concentrates and ferrochrome alloy are "not minerals but mineral-bearing products," meaning they do not attract mining royalties upon disposal.

This decision arose from an application by Zimasco (Pvt) Ltd, a ferrochrome producer based in the Midlands and owned by Sinosteel. Zimasco sought a declaratory judgment against the Zimbabwe Revenue Authority (ZIMRA), challenging the tax agency's classification of its products as minerals, which would incur mining royalties.

Justice Musithu noted that Zimasco had not sold the chromite ore extracted from the earth, and prior to January 2022, there were no established royalty rates for mineral-bearing products. The court emphasized that ZIMRA could not impose royalty fees on these products based solely on assumptions, especially since the legislature had failed to differentiate royalty rates for minerals versus mineral-bearing products.

"The applicant (Zimasco) is therefore entitled to the relief that it seeks," Justice Musithu ruled, effectively absolving Zimasco from paying mining royalties for chrome ore concentrates and ferrochrome alloy disposed of between January 2019 and September 2022.

In the judgment, the court ordered the following:

- The application is granted with costs.

- It is declared that chrome ore concentrates and ferrochrome are mineral-bearing products, and no mining royalties are payable on their disposal.

- The schedules issued by ZIMRA on March 24, 2023, demanding ZWL881,544,511.00 and USD10,523,347.00 as mining royalty shortfalls are set aside.

- ZIMRA is ordered to refund ZWL389,606,502.95 and USD2,485,183.83, as well as any other amounts paid by Zimasco concerning these royalties.

Zimasco was represented by Advocate Thabani Mpofu, while ZIMRA was represented by Simplicio Bhebhe. The ruling marks a significant shift in the regulatory framework governing the mining sector in Zimbabwe and raises questions about the future of royalty collections on mineral-bearing products.

Source - online