(NEWZIMBABWE) Mining tax rakes in US$137 million

Mining tax rakes in US$137 million
18/01/2013 00:00:00
by Business Day

ZIMBABWE has received a windfall from platinum and gold mining companies the Zimbabwe Revenue Authority revealing that mining royalties contributed $136.9m to the country’s coffers last year.

The revenue collected from royalties was well above its target of $130.1m. Mining companies have been contesting the mineral royalty and mining fee increases the government implemented last year.

Mining executives and analysts have said the exorbitant fee increases affected profitability. The country’s chamber of mines has been lobbying for a review of royalties and fees.

"The increase in the rates of royalties on gold and platinum from 4.5% and 5% to 7% and 10% respectively further contributed to the positive performance," tax authority chairman Sternford Moyo said.

New revenue collection powers last year resulted in Zimplats, which is now 51% owned by local Zimbabwean groups, giving up its fight over a $33.8m revised income tax assessment.

The company is now contesting the interest and penalties on nonpayment. Zimplats CEO Alex Mhembere has previously said the tax demand could delay the company’s planned projects to ramp up production.

But after an indigenisation pact under which Zimplats would vendor-finance black Zimbabwean groups to acquire its shares, the government was expected to lower royalties and mining fees, Impala Platinum said after the signing the deal. This could happen as early as June.

Moyo said company tax contributions at $442.7m had firmed 14% against a target of $415m set for the period. This was a result of "recapitalisation by some large companies".

But Zimbabwean companies still faced challenges, including "lack of credit lines, energy shortages and high interest rates" on capital. Gross revenue collections for last year amounted to $3.45bn compared with a targeted $3.23bn.

The yields on bonds of Aquarius Platinum - which operates Zimbabwe’s Mimosa platinum mine in partnership with Implats - slid 158 basis points to an eight-month low after Anglo American Platinum’s (Amplats’) announcement on Tuesday that it will cut production.
It plans placing four mine shafts in South Africa on care and maintenance, cutting 14,000 jobs in the process.

Production cuts at South African platinum mines, which account for three-quarters of world supply, drove the price of the metal to a three-month high on Tuesday. The rally extended a 9.9% increase last year amid violent labour protests.