Aquarius optimistic of 15% platinum tax review

Published: 21 June 2015

Aquarius Platinum Limited (Aquarius) is optimistic Zimbabwe will review the recently-imposed 15 percent tax on raw platinum exports to allow mining companies to remain viable.

In the company's quarterly results to March 2015 released yesterday, Jean Nel, Aquarius chief executive, said the three platinum miners in Zimbabwe are currently engaging government over the issue.

"Although not yet resolved, Aquarius is satisfied with the progress made to date and remain optimistic that the matter will be resolved in due course," said Nel.

This comes after government early this year introduced a 15 percent tax on exports of raw platinum as a way of forcing miners to build a refinery in the country and boost employment creation.

However, there have been fears that the hike in unrefined platinum exports might dent mining companies' expansion plans in the face of declining international metal prices and high production costs.

Zimbabwe holds the world's second-largest platinum reserves after South Africa. But mining sources have said the volumes mined locally are not high enough to make construction of a multi-billion-dollar refinery economically viable.

They are also sceptical that the infrastructure and the energy supply would be adequate to run such plants and point out that there is excess refining capacity in South Africa.

Even if such plants were built, there would be a risk that they may be nationalised at some stage as is happening in the diamond sector - where seven diamonds firms are being merged to form one company jointly owned with government.

The talks between government and platinum miners come as mining royalties - one of Zimbabwe's key revenue heads - took a knock in the first quarter to March 2014, slumping 40 percent to $19,6 million against a target of $32,5 million due to depreciating international mineral prices.

Meanwhile, Aquarius - which jointly owns Mimosa Platinum Mine with Impala Platinum - said production at the Zimbabwe unit decreased by eight percent for the period under review to 610 929 tonnes, attributed to lower operating days, 82 days, in the third quarter compared to 88 days worked in the second quarter.

The mine recorded an attributable profit of $8 million and a net profit before tax of $1,8 million for the quarter, achieved on production of 28 696 platinum group metals (pgm) ounces attributable to Aquarius.

"The tax liability relating to the non-deductibility of royalties as at March 2015 - on a 100 percent basis - was $7,7 million. The liability has been accrued in the financials awaiting the finalisation of negotiations with the authorities and any legislative amendments," the miner said.
- dailynews