- December 17, 2019
- Posted in LOCAL
Zimbabwe will exempt Prospect Resources from paying a levy on unprocessed lithium from its planned Arcadia Mine for five years, which will cut the costs of developing the project, the company says.
Prospect plans to start development at Arcadia Mine in 2020, and the company says this new concession will slash operating costs and increase profitability.
“The development of beneficiation facilities requires time for feasibility studies, mobilisation of resources and construction. In this regard, The Zimbabwean Treasury has approved the exemption from the export tax of un-beneficiated lithium originating from a new mine for a period of five years from the date of commencement of mining operations,” the company said.
In February, Prospect Resources was awarded special economic zone (SEZ) status for Arcadia, which grants the project generous tax breaks and other concessions.
“This is further confirmation that the Government of Zimbabwe is supportive of Arcadia and is focused on attracting foreign investment into the country. This incentive will materially lift Arcadia’s project economics and will accelerate payback of project finance,” Prospect Managing Director Sam Hosack said.
“Our previously announced DFS and updates have all applied a 5% tax on un-beneficiated lithium to products sold. Removing the 5% tax for the first 5 years of production will reduce operating costs per tonne, increase profitability and lift the projects Net Present Value (NPV). Further details will be provided in due course.”
In November, a new survey showed that the ore reserves at Arcadia could be 39% more than previously estimated, which extends the life of the mine and makes the project more viable.
Despite the tax holiday on lithium exports, Prospect has already started processing samples from the project. In December 2018, the company shipped its first battery-grade lithium carbonate from its pilot plant near Kwekwe. The next step, Prospect said at the time, would be to reconfigure the plant to manufacture lithium hydroxide. The hydroxide is in demand for its use in battery cathodes, and fetches a higher price than lithium carbonate.
Desperate to win investments into mining, Zimbabwe has repeatedly postponed plans to levy miners, particularly in platinum, for exporting raw or semi-processed ore_NewZWire