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GDI tax holiday challenged in court

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GDI tax holiday challenged in court

Zimbabwe Lawyers For Human Rights (ZLHR) has filed an urgent application in a bid to suspend SI 26/2020 a law that allowed the government to exempt some businesses, in this case, Landela’s Great Dyke Investment (GDI) from paying tax.

Rudairo Mapuranga

Through their Twitter handle, ZLHR said a citizen Dumisani Dube represented by the organisation’s lawyer Tanaka Muganyi, argues that the tax holiday given to the mining firm is unconstitutional and violates equality of persons at the same time insulting the principle of finance management.

“Urgent application has been filed seeking suspension of SI 26/2021. Dumisani Dube represented by @ZLHR Lawyers Tanaka Muganyi, argues that exemption of Great Dyke Investments Pvt Ltd from paying taxes is unconstitutional, it violates the right to equal protection of the law.

SI 26/2020 also violates sec 298(1) of Const on principles of public finance management, sec 298(1)(b)(i) on burden taxation that must be shared equally.” ZLHR said.

The decision by the government to grant the Platinum miner a five-year tax holiday has been described as a win for the country on its quest to promote mining development and growth.

The move to exempt the mine from paying tax was described as a strategic intervention that has the potential to unlock mining sector potential and can contribute significantly towards the mining sector attaining a US$12 BILLION industry by 2023 consequently becoming a major catalyst for the country to achieve the President’s vision of becoming an upper-middle-income earner by 2030.

GDI is projected to reach full mining capacity in 2024 meaning that soon after the company starts operating at full throttle they will start remitting tax to the government.

The project has the potential to become Zimbabwe’s biggest and one of the world’s biggest platinum mines, its progress is therefore vital to the government’s plans to revive the ailing economy.

Chairperson and Economist of the Institute of Mining Research (IMR) Layman Mlambo said the decision by the government to grant the platinum miner a tax holiday was crucial for the development and growth of the mining project.

“It is not rare and imprudent to give big developing projects a breathing space to allow for full development at the corporate level. GDI is projected to reach full throttle (development) in 2024, that’s 5 years effective beginning of 2020. However, it is the corporate and not the dividend recipient that needs incentivising hence exemption. So exemption on CIT in my view is in the order given that there are elaborate facilities we are looking at (mining, mineral processing, beneficiation, other infrastructures, etc). Healthy cash flows are critical for GDI at this stage. The assumption is that the income tax exempted will be reinvested into the enterprise.” Mlambo said.

Mlambo also noted that the GDI will still be paying royalties to the government meaning their operation is still going to benefit the nation. He said the move is likely to have an impact on overall production and earning targets for the project and set the tone for rebuilding business confidence.

“It is true that there is a compromise on domestic resource mobilization because mining is a leading economic sector in Zimbabwe. However, we may balance this criticism with the fact that royalties are not exempted because they are paid on gross revenue (regardless of whether profits have been made or not). This is where the country gets much of its revenue and for the platinum sector in Zim, the rate is 10%, which is the highest in SADC. So, the country is not losing out on income completely. I would say that a sufficient answer to your question will require an analysis of the whole agreement between the government and GDI (the contract), which requires transparency/ disclosure of contracts. A whole fiscal regime would include royalties, ground rentals, expenditures on HRD/R&D, withholding taxes on repatriated dividends (with rates depending on dividend destination – tax haven or non-tax haven), local procurement/content clauses, any resource rent taxes, employment clauses, skills transfer, technology transfer, etc.” he said.

Parliamentary Portfolio Chairperson on Mines and Mining Development Hon Edmund Mkaratigwa said the decision by the government to exempt the platinum mine from paying tax for the next five years means the government is looking at a bigger picture.

“Sometimes it’s not only the immediate revenue from tax accruals that should inform policy, Mining is a powerful industry with the potential to transform the economy and it is not a coincidence that His Excellency (the President) has set it as the anchor in reviving our economy.

“To achieve this envisaged growth, we obviously need investment from both local and international capital.

“But we are in difficult times occasioned by Covid-19 which has weighed down businesses and investors might be tempted to slow down on new frontiers which are at development stage as is the case with most projects in Zimbabwe.

“So what a tax holiday does is to defend such an investment and you won’t see anyone pulling out. Even in the eyes of other would-be investors, the country is sure to earn some credit,” Honourable Mkaratigwa concluded.

Barrick extends Tongon mine life to 2023

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Barrick extends Tongon mine life to 2023

Canada’s Barrick Gold  said on Thursday that continued exploration and the conversion of resources to reserves at its Tongon mine in the Ivory Coast have allowed it to extend the operation’s life to 2023.

The world’s second-largest gold miner, which considered selling Tongon in 2019, now counts it among its most valued assets and is pursuing further opportunities for replacing reserves.

The mine produced a total of 284,863 ounces of gold in 2020, at the top end of its guidance for the year, Barrick said.

TONGON PRODUCED A TOTAL OF 284,863 OUNCES OF GOLD IN 2020, AT THE TOP END OF ITS GUIDANCE FOR THE YEAR

Speaking to Ivory Coast media, Barrick president and chief executive Mark Bristow highlighted some of the obstacles Tongon has had to overcome to achieve its current performance.

The mine was built and commissioned in the midst of civil war and it has since operated in an unstable socio-political environment. It has also been impacted by a broad range of problems, including a mill fire, recurring technical issues, and an erratic grid power supply.

“Despite all these challenges, Tongon has been consistently profitable and in 2020 again paid a $150 million dividend to its shareholders,” Bristow said. “It provided $1.2 million to the government to support its campaign against covid-19 while implementing effective prevention measures at the mine to protect its people and the business.”

In line with Barrick’s policy of supporting local business, Tongon also spent $105 million — 66% of its total procurement budget — with Ivorian contractors and suppliers in 2020.

Best safety record

Bristow noted that Tongon had the best safety record among Barrick’s assets. Until it suffered one lost-time injury in October last year, the mine had recorded more than 15 million lost-time injury free work hours over 1,120 days.

Since pouring its first gold in 2010, Tongon has contributed more than $1.6 billion to the Ivory Coast’s economy in the form of taxes, infrastructure development, salaries and payments to local suppliers, Barrick said.

The company has a nearly 90% stake in the gold mine, which is located 682km (424 miles) north of the coastal city of Abidjan. The Ivorian government and local investors own the remainder interest.

Mining.com

Glencore’s 2020 output hit by Congo mine closure, sticks to targets

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Glencore’s 2020 output hit by Congo mine closure, sticks to targets

Glencore said on Wednesday its copper and cobalt production fell in 2020 after the Mutanda mine closure in Democratic Republic of Congo but said the ramp up of another mine in the African country was progressing well.

The London-listed company, which also mines coal, nickel, silver, lead, gold and zinc, stuck to all of its production targets for 2021, after trimming coal guidance last year.

The mining and trading firm said copper production fell 8% to 1.26 million tonnes in 2020 compared to a year earlier, while cobalt production dropped 41% to 27,400 tonnes.

COAL PRODUCTION IN 2020 WAS DOWN 24% TO 106 MILLION TONNES

Excluding the impact of the closure of Congo’s Mutanda mine, 2020 copper output was in line with the previous year and cobalt was 6,200 tonnes higher due to Katanga mine ramping up, Chief Executive Ivan Glasenberg said.

Glencore, the world’s biggest thermal coal exporter, has said it will deplete existing coal reserves.

Coal production in 2020 was down 24% to 106 million tonnes. In Colombia, the miner suffered a three-month strike at its Cerrejon coal mine and the closure of its Prodeco mine. Coal output from Australia was lower.

Glencore said it planned to reach net-zero carbon emissions by 2050 with a 40% reduction in its direct and indirect carbon footprint by 2035 compared with 2019 levels, making them fully aligned with the Paris agreement on climate change.

Most of Glencore’s larger operations were not affected by closures caused by the covid-19 pandemic, but output was hampered at its ferrochrome operations in South Africa, oil fields in Chad and a nickel mine in New Caledonia.

Zinc output rose 9% to 1.17 million tonnes while ferrochrome production was 28% lower at 1 million tonnes.

Analysts at JP Morgan said Glencore fell slightly short of its expectations for coal, nickel and copper production while beating on zinc and ferrochrome. They maintained a “neutral” recommendation on the miner.

(By Zandi Shabalala and Muvija M; Editing by Edmund Blair)Reuters

BNC ups nickel sales in Q4

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BNC ups nickel sales in Q4

Bindura Nickel Corporation (BNC) said on Thursday nickel sales were up 20 percent to 1 864 tonnes in the quarter ending December 2020 on the back of increased demand and production.

In a trading update, the miner said it had recorded a 9 percent increase in tonnes mined to 111 525.

Head grade was down 8 percent
while recovery remained flat at 86,2 percent.

“The company sold 1 864 tonnes of nickel in concentrate in the quarter  under review, which was 20 percent higher than the sales tonnage  achieved in the quarter ended 31 December 2019,” BNC  said.

“The sales performance was in sync with the improved production during  the same period.”

BNC said the price of the mineral on the international market during the quarter was 4 percent higher than the previous quarter as demand from the Chinese market improved as well as improved sentiment following  Joe Biden’s win to become the new United States President.

In the next quarter, BNC said there was no anticipation of improved  operational and financial performance due to planned production stoppage intended to facilitate the Trojan Mine shaft re-deepening
project.

“However, in the immediate aftermath of the Re-deepening Project  commissioning, production will be ramped up to more than 60 000 tonnes of  ore per month, particularly in respect of the mining of disseminated ore,” BNC said.

“The company’s operational and financial performance is expected to  improve due to the consummation of this critical project.” — Business Reporter/New Ziana.

Union Demands Action Over Employee Abuses By Chinese Miner

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Union Demands Action Over Employee Abuses By Chinese Miner

A LOCAL mineworkers’ union has written to Fools Mine outside Bulawayo urging the under-fire Chinese employer to improve its relationship with employees.

The National Union of Mines Quarrying, Iron and Steel Workers of Zimbabwe (NUMQISWZ) Thursday wrote to the miner urging management there to improve the situation.

This comes as the National Peace and Recreation Commission last week said it was also investigating allegations of beatings on employees by company director Zhang Zhongyi who is 61.

Zhongyi allegedly assaulted two of his employees at the company premises after they confronted management over their outstanding wages.

He was arrested for assaulting Tatenda Mangena and Costan Mhasa and is out on $3 000 bail.

Zhongyi has since been ordered by a Bulawayo magistrate to leave the country after immigration authorities traced his status and discovered he remained in the country illegally after his permit expired.

NUMQISWZ legal education and training officer Shadreck Pelewelo said workers have been forced to work without protective clothing since the inception of the mine.

“The workers were asked to buy their own safety clothing. Some go underground without helmets.

“To make it even worse, when electricity goes, the mine workers sometimes spend two days underground until the electricity is restored.

“It is very risky and worse than the artisanal mines situation,” Pelewelo said.

He added, “We want to put a stop to this. We have written to them and gave the deadline for them to respond as last week on Friday, but they have not responded or bought safety clothing for the workers.

“In terms of section 104, subsection 4 of the Labour Act, workers can go on industrial action without notice based on the dangers they face in their working environment.”

Pelewelo said the union will inform the mines ministry and advise members to start industrial action.

Union regional officer Abraham Kavalanjila also said the workers were at risk of contracting Covid-19 as management ignored calls to provide PPEs and sanitisers.

However, mine manager Thabani Masuku admitted the company was currently having PPE challenges but said they were engaging suppliers.

“Yes, there is a challenge, but we are engaging some suppliers to provide PPEs. We however have sanitisers and temperature checking is available,” he said.

Masuku could not be drawn into further comment on the issue of safety clothing such as helmets, gumboots and the issue of workers spending a long time underground after electricity cuts.

“Yes, we received the communication from the union and we are going to respond soon,” he said.

A group of civic society organisations last week petitioned the country’s independent commissions to probe rampant abuses at the mine.

NewZimbabwe

‘Many Covid-19 Cases Going Unreported In Mining Sites’

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‘Many Covid-19 Cases Going Unreported In Mining Sites’

A LOT of Covid-19 cases in mining sites are going unreported with many lives put at risk, a trade unionist has said.

Zimbabwe Diamond and Allied Minerals Workers Union (ZDAMWU) general secretary Justice Chinhema told NewZimbabwe.com the group was concerned about the unfortunate development.

“Our workers union which is pro-miners since obtaining the essential services status to monitor and enforce Covid-19 regulations within mining sites has noted that there are more unreported Covid-19 cases in mines and the cases seem to be very high,” Chinhema said.

He said his union stumbled upon the startling revelations while touring mining districts across the country.

“We have been educating workers and communities about the Covd-19 second wave which is more deadly than the first wave and we are therefore encouraging workers to practise the required regulations.

“Of concern is the unreported Covid-19 cases which seem to be high and we believe there is a need to carry out massive tests.

“The situation is more serious in small scale mines where we visited. In places such as Esigodini, we realised that in terms of adherence to Covid-19 regulations, it seems not much has been done.

“It seems the small-scale miners have no regard for the law,” he said.

Chinhema said his union was also adding to national efforts to the Covid-19 fight.

“We are not only raising awareness in mining communities. We are also proactive as we are also in the process of making about 5 000 face masks that will be distributed across the country to families of workers.

“We are currently mobilising for resources from organisations that can help with sanitisers. Sanitisers are mostly not available in mining communities.

“We will be sending an SOS to our sister unions outside Zimbabwe like NUM in South Africa through industrial for help towards testing kits.

“We need to be able to carry out testing of workers or families in mining communities where we think cases are not reported,” he said.

Meanwhile, Chinhema has reiterated calls for a Covid-19 allowance within the sector.

“We will not flinch and back down in demanding and lobbying for Covid-19 allowances for mine workers.

“The allowances will go a long way in motivating mine workers. We are aware that employers want production while for workers safety is a need,” he said.

 

NewZimbabwe

Councillor, Businessman In Bitter Mine Ownership Row

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Councillor, Businessman In Bitter Mine Ownership Row

A vicious mine ownership wrangle pitting a Zanu PF councillor and a local businessman has erupted in the border city, with the former accusing the city father of grabbing his highly productive mine.

The property, located in Odzi area, belongs to Twin Castle Resources owned by businessman Antony Mukandabvute

Luckson Mawanga, who is councillor in the area, allegedly grabbed a gold claim last week and kicked out workers.

Manicaland mining director Omen Dube Wednesday confirmed the dispute.

“We are seized with the matter. There is a dispute between a miner and a miner,” he said.

Dube and his team Wednesday visited the mine.

“We visited the mine under dispute yesterday and we are resolving the matter very soon,” he said.

David Stikula, who was the manager for Twin Castle Resources at the mine, narrated the situation.

“We were about to start work at the gold claim in Odzi when some people stormed the gold claim claiming that they were sent by Mawanga. They told us to vacate the gold mine,” he said.

“They threatened to shoot us, but we had no option but to leave the gold claim as we feared being shot and did not want to risk our lives.

“We went to the nearby roadside as we also called our bosses about the issue who said we should try by all means to be safe and should not retaliate.

“We tried in vain to show our mining certificates to bouncers, but they had none of it.”

Mawanga was not immediately available when sought for comment.

NewZimbabwe

De Beers’ diamond sales beat pre-covid levels

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De Beers’ diamond sales beat pre-covid levels

De Beers, the world’s largest diamond producer by value, said on Wednesday sales in the first cycle of 2021 were 44% higher than in the previous one, evidence that a long-awaited recovery in the diamond market is here.

The Anglo American unit, which sells diamonds to a handpicked group of about 80 buyers 10 times a year at events called “sights,” sold $650 million worth of rough diamonds. That compares to the $551 million it fetched in the same period last year when the covid-19 pandemic hadn’t yet hit an already weakened market.

De Beers attributed the positive results to stronger demand ahead of the Chinese New Year and Valentine’s Day and as midstream customers restocked to fill orders from retail businesses.

EXPERTS SAW THE RESULTS OF DE BEERS FIRST SALE OF THE YEAR AS A FURTHER SIGN THAT THE SECTOR IS BOUNCING BACK

“While risks to recovery as a result of ongoing restrictions on the movement of both people and goods persist, we have been encouraged by demand conditions,” chief executive Bruce Cleaver said in the statement.

Due to ongoing restrictions on the movement of people and products across the globe, De Beers has continued to implement a more flexible approach to rough diamond sales, extending the first event beyond its usual week-long duration.

As a result, the miner said, the provisional rough diamond sales figure quoted for Cycle 1 represents the expected sales value for the January 18 to February 2 period and remains subject to adjustment based on final completed sales.

Bouncing back

Experts saw the results of De Beers first sale of the year as a further sign that the sector is bouncing back.

Dmitry Glushakov, Head of Metals & Mining Research at VTB Capital, believes the positive momentum in the rough diamonds segment will last a few months, allowing miners to continue selling down inventories.

The investment arm of VTB Group, one of Russia’s largest banks, estimates that global rough diamond output was down 19% last year to 112 million carats. It expects 2021 production to be little changed as the full depletion of the Argyle mine fully offsets the yearly production pick-up at De Beers and Alrosa, the world’s largest diamond producers.

Mining.com

No schmoozing and boozing as the Indaba mining jamboree goes online

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No schmoozing and boozing as the Indaba mining jamboree goes online

The prospect of chasing cocktails and contacts in the shadow of Table Mountain draws executives and officials from around the world to Cape Town each year for Africa’s biggest mining conference.

But this year the Investing in African Mining Indaba is online only and has been cut to two days rather than four as a second wave of the covid-19 pandemic sweeps South Africa.

For the mining industry, it means not only foregoing Cape Town’s famed wines, vistas and sun but also a key deal-making and networking opportunity – not to mention the blow to the local economy as normally crammed hotels lie deserted.

“I’M NOT OUT THERE DRINKING FOR MY HEALTH. IF I’M OUT THERE DRINKING UNTIL MIDNIGHT, IT’S BECAUSE I’M WITH SOMEBODY WHO I THINK HAS POTENTIAL”

Peter Major, director of mining at Mergence Corporate Solutions

“The main thing that’s lost is not so much on the formal side … but on the spontaneous combustion side of these gatherings,” said Erez Ichilov, managing director of mining finance company Traxys Projects in New York.

“Our business is demanding, it’s intense, and I think it’s OK if people have some fun while they’re working.”

During the famously boozy Cape Town jamboree, delegates juggle cocktail events each night with dinners organised by the biggest mining companies. Anglo American hosts its gala dinner at its Vergelegen wine farm on Cape Town’s outskirts.

“I’m not out there drinking for my health. If I’m out there drinking until midnight, it’s because I’m with somebody who I think has potential,” said Peter Major, director of mining at corporate advisory house Mergence Corporate Solutions.

Major said he typically gets 15 to 20 good leads during Indaba week alone. Normally, it would take three to six months to generate such leads.

Besides pitching their companies, industry players meet new clients, discuss deals, and schmooze government officials.

While major mining companies may be less concerned about face-to-face gatherings, mid-tier and junior miners looking for investors are likely to miss out if conference models change for good after the pandemic, said Deloitte partner Andrew Lane.

Smaller companies such as Australia’s Orion Minerals use Indaba to bring as many investors as possible to visit their South Africa projects, which is now impossible.

The inability for Chinese investors to conduct due diligence on-site in South Africa has affected some of the financing for Orion’s Prieska project, Chief Executive Errol Smart said.

The local economy is also feeling the pinch.

Business events accounted for 11.4% of the tourism industry in South Africa in 2019, according to the Western Cape provincial government.

The loss of revenue from the mining conference comes after most of the Western Cape’s top tourist attractions suffered a more than 60% drop in visitors over the December peak season.

“Last year, we were fully booked a good couple of months before the Indaba,” said David Dix, general manager at The Capetonian, a 169-room four-star hotel near the convention centre where 6,000 delegates attended last year’s event.

“It’s a clientele that normally pays more, it’s our peak season rates we get at the time, and obviously now there is absolutely nothing,” he told Reuters in the hotel’s deserted dining room.

Reuters

Mali gold production hits fresh high in 2020

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Mali gold production hits fresh high in 2020

Mali’s industrial gold production reached 65.2 tonnes in 2020, slightly higher than the previous year’s record production of 65.1 tonnes, mines ministry statistics showed on Tuesday.

Production had been forecast at 59.7 tonnes but surpassed expectations for the second year in a row due to improved technical performance by mining companies, said Aboubacar Ogognagaly, head of the mines division.

Mali’s total gold output for the year was estimated at 71.2 tonnes including an additional 6 tonnes of gold produced by artisanal miners, Ogognagaly added.

The West African country is one of Africa’s biggest gold producers with about 13 mines operated by multinational companies including Barrick Gold , B2Gold and Resolute Mining.

Industrial production is expected to increase further in 2021, although official forecasts were not yet available, said a mines ministry official.

Reuters

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