New mining status costs Zimplats

Published: 06 September 2018

ZIMPLATS, the country's largest platinum miner, says its profits declined by 94 percent in the year to June 2018 after the company changed its status from a special mining lease (SML) holder to mining lease (ML) holder.

The platinum giant was granted two separate mining leases over two pieces of land measuring 6 605 hectares and 18 027 hectares respectively, with effect from May 31, 2018, after it had released to government the contentious 23,903 hectares of land it held.

Zimplats said its income tax expense increased from $55,8 million in 2017 to $163,3 million this year driven mainly by a $98,1 million deferred tax charge.

"The deferred tax charge for the current year was significantly higher than the prior year because of the change of the operating subsidiary's status from being a special mining lease holder to a mining lease holder.

"A deferred tax charge of approximately $95,4 million was recognized arising from the change in income tax rate of 15, 45 percent under the SML tax regime to 25,75 percent under the ML tax regime inclusive of AIDS levy," the group said in its preliminary final report for the year ended 30 June 2018.

Zimplats earlier in the year finally reached a consensus with government on a legal battle of the land with government.

The special mining lease that Zimplats had was due for renewal next year.

In 2013, the Zimbabwean government gave notice of its intention to compulsory acquire land measuring 27 948 hectares within Zimplats' special mining lease area.

According to the report, as a result of such factors, profit before income tax for the year increased from $101,3 million last year to $166 million while current income tax and additional profits tax increased by a net total of $13 million, mainly due to improved profitability offset by a $8,2 million benefit from adjustments in respect of prior years' computations.

"Consequently, profit for the year decreased 94 percent from $45,5 million in the 2017 financial year to $2,6 million," the group said.

During the period under review, the group earned $13,6 million from the Reserve Bank of Zimbabwe (RBZ)'s 2, 5 percent export incentive scheme.

The platinum giant is entitled to the export incentive on export proceeds received in Zimbabwe pursuant to the incentive scheme aimed at boosting exports to improve the country's foreign currency situation.

In addition to that, Zimplats realised $10,4 million from the disposal of treasury bills it received from government in March 2018. The treasury bill had a nominal value of $11,3 million and a maturity date of November 24, 2020 and was in settlement for interest on the historic $34 million owed by the RBZ.

- fingaz

Tags: Zimplats,