Platinum companies to meet government as new levy takes effect

Obert Mpofu

Obert Mpofu

By Tererai Karimakwenda
SW Radio Africa
09 January 2014

Zimbabwe’s platinum mining companies, who are facing a new15% export levy, were due to meet government officials Thursday hoping to clarify issues surrounding an ultimatum to set up a local refinery.

According to the Associated Press (AP), platinum companies were given 10 days to submit proposals for the new refinery, which the government has demanded be built by the end of this year.

Next to South Africa, Zimbabwe has the second largest reserves of raw platinum in the world, but the country has no local refinery. Former Mines Minister Obert Mpofu gave the industry a two-year ultimatum, ending in twelve months, to set up one or risk a government ban on all raw metal exports.

Platinum giants, including Impala Platinum (Implats) and the American Amplats, opposed the proposal from the beginning saying a local refinery was not sustainable under current production levels and would cost billions to establish.

But the new ZANU PF led government, still reeling from a disputed 2013 election victory, has carried the threat forward into 2014. The export levy on all raw platinum exports was proposed by Finance Minister Patrick Chinamasa in his budget statement last month, and companies are expected to pay the 15% levy as of this month.

Economic and political commentator Bekithemba Mhlanga told SW Radio Africa that the amount of investment needed for a project of that magnitude requires transparency, and for both sides to be willing to compromise.

“One cannot just legislate for things to be done and commandeer people to set up a refinery plant. It takes a whole lot of planning, coordination of resources and clear thinking about these things,” Mhlanga explained.

He also addressed the issue of the time allocated the mining companies to implement government’s orders, saying two years is sufficient time to just explore and decide whether it is economically viable, but not to set up the actual plant.

“I think we also need to look at whether government is looking to serve the interests of Zimbabwe with this plant or are they looking to serve the interests of other companies and individuals. I think it is a wide and complex discussion that we need to have,” Mhlanga said.

He added that given the government’s record so far, there are also the issues of trust, reliability and honesty at play when so much investment is involved. He pointed to the lack of transparency in diamond mining as an example.

Thursday’s meeting was expected to iron out details regarding the local refinery as well as the export levy. But ahead of that meeting, there were no indications that government would back down.

The industry on the other hand, is faced with an unsustainable proposition and even worse risks if they do not comply. One report quoted an official at Unki platinum mine, a subsidiary of Amplats, as saying that platinum mining companies “had no option but to comply” with payment of the 15% export levy.

Like other sectors that have already collapsed, platinum mining is a lucrative business that government is increasingly exploiting in a desperate bid to save a government that is broke.

The meeting on Thursday is just another blow that would contribute to the destruction of an otherwise viable industry and further weaken Zimbabwe’s already ailing economy.

One Responseto “Platinum companies to meet government as new levy takes effect”

  1. Chimbwido Warvet says:

    Anything short of a local refinery is not good enough. We need local refineries for all precious metals mined in this country. All precious metals should be exported in their refined state to determine the true value of the wealth of this country. As of now, Zimbabwe is being cheated and will never get to grips with the true value of its mineral wealth that is exported in its raw state. It is not rocket science to know that a lot of dishonesty is going on unnoticed by companies that are exploiting and exporting our minerals in their raw state. Any tax levied on false figures given to the state by mining companies, is not good enough.

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