LONDON (Reuters) – Miners Aquarius and Impala said on Friday they are seeking clarity from Zimbabwe’s government over a proposed 15 percent export tax on unrefined platinum which, if enforced, would slash their margins.
The government first proposed the duty in 2013 an effort to push mining companies to process the metal domestically. It then postponed its introduction until January 2017 to give the firms time to build the necessary smelting and refining plants.
But the government’s finance bill, which was published on Jan. 9, proposes its introduction from Jan. 1 2015.
With platinum prices already depressed, the tax would eat into the profits of companies with platinum assets in the country, which include Anglo American as well as Aquarius Platinum and Impala.
The impact on Aquarius’s Mimosa mine in second quarter results would be to reduce cash margins from $182 per ounce to $17 per ounce, Liberum analysts said.
“We would imagine (the tax)… will be watered down in some way,” they wrote in a note.
Zimbabwe holds the world’s second-largest platinum reserves after South Africa. But mining sources have said the volumes mined there 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 are built, there is a risk that they may be nationalised at some stage.
“Aquarius and Mimosa are hopeful that the matter will be resolved and remain committed to building good working relations with the Government of Zimbabwe,” Aquarius said in a statement.
Taxes are finalised on the 7th of each month for the prior month in Zimbabwe, so the industry should have clarity on Feb 7.