Blow for Zimra in Zimplats royalty dispute

The High Court has ruled that Zimbabwe Platinum Mines (Zimplats), a subsidiary of South Africa's Impala Platinum (Implats), is not liable to pay mining royalties on matte and concentrate exported between June 2018 and December 2021, dealing a significant setback to the Zimbabwe Revenue Authority (ZIMRA).

In a judgment with far-reaching implications for the mining sector, Justice Rodgers Manyangadze held that the Finance Act, as it existed before amendments that came into effect on January 1, 2022, made a clear legal distinction between "minerals" and "mineral-bearing products" and did not prescribe royalty rates for intermediate products such as matte and concentrate.

ZIMRA had assessed Zimplats for alleged royalty underpayments amounting to ZWL2.03 billion, approximately US$7.1 million, arguing that royalties should have been calculated on the gross market value of the final refined mineral, without deductions for beneficiation or processing costs.

The court rejected that position, ruling that no lawful royalty obligation could arise in the absence of an expressly fixed rate for mineral-bearing products during the relevant period.

"The Finance Act… does not provide calculation for mineral-bearing products. It only provides calculation for minerals," Justice Manyangadze said. He added that matte and concentrate "cannot attract the same royalties as minerals that have gone through the refinery process."

Central to the ruling was the Supreme Court decision in ZIMRA v ZIMASCO (SC 79/13), which held that chrome ore concentrates and ferrochrome were not subject to royalties prior to January 2022 because no rates had been prescribed for mineral-bearing products. Justice Manyangadze said that precedent was "on all fours" with the Zimplats dispute and therefore binding on the High Court.

"In matters of taxation and fiscal obligations, it is a fundamental principle that no tax or royalty can be imposed without clear and express statutory authority," the Supreme Court held in the ZIMASCO case—a principle the judge said was decisive in the present matter.

ZIMRA had attempted to rely on a 2025 amendment to the Finance Act that retrospectively expanded the definition of "mineral" to include mineral-bearing products dating back to 2010. However, the court ruled that definitions alone cannot create a tax obligation and cautioned against using retrospective amendments to remedy the absence of a charging provision.

"As no rate had been fixed for such products in the Schedule at the relevant time, the retrospective amendment cannot impose an obligation that did not previously exist," the court said, echoing the Supreme Court's reasoning.

The court granted Zimplats the primary declaratory relief it sought, confirming that it owed no royalties on matte and concentrate sold to Impala Platinum during the disputed period. Consequently, ZIMRA's assessed royalty shortfalls and associated penalties fall away.

Zimplats was represented by Advocate Thabani Mpofu, while ZIMRA was represented by Samuel Banda.

The ruling is expected to have wider implications for the interpretation of mining royalty obligations in Zimbabwe, particularly for producers exporting intermediate mineral products before the 2022 legislative changes.