Local platinum miners are seeking tax holidays on beneficiation projects to stimulate investments into the sector, a recent report says, citing views from a survey of industry executives.
Vongai Mbara
The same concerns have been raised by Lithium producers who are arguing that the current tax beneficiation framework is discouraging investments into value-addition facilities.
Mineral beneficiation has been identified as critical towards achieving the Government’s target of a US$12 billion mining industry by 2023.
According to Platinum producers, tax incentives could boost investments into new and existing projects.
“The PGMs producers indicated that they are currently engaging the Government for an optimal PGMs beneficiation framework,” says the report, which was commissioned by the Chamber of Mines of Zimbabwe (CoMZ).
“Among key recommendations cited by platinum producers are removal of beneficiation taxes and the introduction of beneficiation incentives to accelerate capital spending in the beneficiation sector. The producers are looking forward to the Government adopting the recommendations and improving capital inflow into the sector.”
The current platinum tax structure which took effect on January 1, 2018 penalises miners for export of white concentrate at 5 percent, white matte 2,5 percent and base metals 1 percent. The charges are levied on gross export value.
The miners are saying they should not pay penalties for failure to beneficiate.
Zimbabwe holds the world’s second-largest deposits of platinum after South Africa and has been pushing mining firms to build refineries to stop the export of raw platinum ore and optimise earnings.
The report said potential investors view the current beneficiation tax framework as undermining projects’ net present value, resulting in some rejecting potentially viable projects.
“The tax breaks on beneficiation projects are quite critical in the sense that they encourage investment into beneficiation facilities, especially at a time the Government is targeting to boost revenue from the mining industry,” Mr Carlos Tadya, an analyst with a local research firm, said.
“It is an issue the Government needs to seriously look into.”
On Thursday, Zimplats, a unit of Impala Platinum, announced that it would invest US$200 million in a base metal refinery (BMR) as part of its US$1,8 billion medium- to long-term investment plan for Zimbabwe.
The BMR plant would have capacity for local PGM base metal refining as well as create more than 1000 jobs directly and indirectly.
South Africa-based Anglo-American
Zimplats and Mimosa Mining Company are currently sending platinum matte to SA for refining.
Zimbabwe plans to grow mining revenue to US$12 billion by 2023 as it seeks to transform the country into an upper middle-income economy by 2030.
Gold exports are expected to reach US$4 billion while platinum exports are forecast to top US$3 billion.
In the latest report, mining executives expressed confidence about future prospects on the back of positive commodity price outlook, improved capacity utilisation and anticipated increase in output.
But they expect the domestic investment climate, characterised by high costs of capital, foreign currency constraints and poor infrastructure, to remain depressed.
The Mining Business Confidence Index (MBCI), which gauges confidence among local miners, is expected to increase to 17 next year, from 9 in 2021 — the biggest jump in nearly four years.
The index scale ranges from -100 to +100, with the lowest score representing the least level of confidence and the biggest score representing the highest.
“Generally, mining executives are confident about the prospects for their businesses in 2022.
“Notable among the positive sentiments include optimism about commodity price outlook, improvement in capacity utilisation and anticipated mineral output growth.”
The majority of the mining executives surveyed said they were planning to ramp up production in 2022 by ranges of between 3 percent and 100 percent.
