The Sunday Mail
MIMOSA Platinum Mine, the second largest producer of the metal after Zimplats, is giving signals that it might pull the plug on its expansion project if Government does not rescind current regulations that impose a 15 percent tax on the export of unrefined platinum.
The levy was first proposed in 2013 in an effort to push mines to process the metal locally.
Last year, Finance and Economic Development Minister Mr Patrick Chinamasa announced that Government had deferred the tax to January 2017 to give mining houses time to build the smelting and refining plants. However, Government’s Finance Bill has effectively introduced the tax.
Johannesburg Stock Exchange (JSE)-listed Amplats, the parent company of Unki, the country’s third largest platinum producer, announces its year-end results tomorrow, while another JSE-listed entity, Aquarius, a joint owner in Mimosa together with Zimplats, is set to announce its interim results on Wednesday.
A discussion paper for one of the mines on the impact of the 15 percent export levy seen by The Sunday Mail Business says the new charges will cast doubt on Mimosa’s expansion project, which was scheduled for July 2015, and prejudice the Government of an estimated US$25 million in revenues. The project is expected to create 200 new jobs.
“Implications of the export (tax) on Mimosa will undoubtedly be up for discussion. Among other discussion points will be how the proposed 30 percent expansion, which was for July 2015, and is meant to create 200 jobs and add an additional US$25 million to the fiscus, is likely to be put on hold.
“From a fiscal point of view, there is also no benefit in the 15 percent tax in the short term. The minute the shareholders understand that the company has had to pay 15 percent tax, Mimosa will be forced to go on closure. “In any case, the proposed 30 percent expansion brings in greater revenue to the State.
“The reason Mimosa and Unki have opted to go through Zimplats is that their current throughput is too low to enable them to build their own refineries. Sadly, whereas Zimplats is taking the lead in the programme, it is not affected by the 15 percent tax.
“There is need to isolate the two smaller companies whilst engaging directly in the process of building refinery taking place at Zimplats, ” read part of the document.
Unki and Mimosa have, however, asked Government that based on concrete evidence that platinum producers are working towards building a local refinery, the export tax should be delayed until 2017.
Sources familiar with the goings-on said last week platinum producers have since submitted their commitment letter through Chamber of Mines of Zimbabwe president Mr Alex Mhembere, who is also the chief executive officer of Zimplats.
Mimosa in particular fears the implications that the tax will have on its planned capital expenditure.
Added the report: “With the company being in a cash negative position, its shareholders will put the operation into care and maintenance, since continued operation will become unattractive.
Lobbyists are also railing against Government’s decision.
Buy Zimbabwe contend that the tax will negatively affect investment.
“Buy Zimbabwe fully appreciates the Government’s interest to beneficiate our natural resources to create more jobs and value for our great country; (however), this will compromise any expansion projects and is likely to cause a cutback on capital expenditure, retrenchments, company closures and add to confusion our ability to attract foreign direct investment,” said Buy Zimbabwe chief economist Mr Kipson Gundani.
Mines and Mining Development Minister Mr Walter Chidhakwa could not be reached last week.
However, market watchers opine that mining houses want to hold Government to ransom by threatening to discontinue local investments.
But Government is determined to get the maximum possible value from its mineral resources.
