The Zimbabwean government and platinum producers are again at odds over the timeline for local beneficiation, with miners seeking a further delay in a tax on unrefined minerals. They argue that persistent power cuts have delayed their progress towards local refining targets.
Platinum group metal (PGM) producers currently process their ore into concentrates and mattes, which are then sent to South Africa for final refining. Until they establish domestic refining capacity, miners must pay a 5% export tax on unrefined platinum.
Zimplats, the country’s largest producer, is investing US$1.8 billion to expand its processing facilities, including a new smelter and refurbishing its base metal refinery. However, these projects have faced delays due to power shortages and global platinum price weakness. In a February letter to the Treasury, the Chamber of Mines reported that Zimplats had begun processing concentrates from Mimosa Mining Company, making a key step in increasing local processing capacity.
“To this end, Zimplats has commenced toll processing of concentrates from Mimosa Mining Company,” the Chamber stated. Zimplats aims to process half of Mimosa’s concentrates by June and all of it by August under a toll smelting agreement.
However, power shortages have disrupted these efforts. ZESA has told PGM and ferrochrome smelters, the biggest power consumers, to reduce their reliance on the national grid. In January, this forced Unki to suspend smelting operations temporarily and further delayed Zimplats’ expansion plans.
Said the Chamber: “These power outages are also expected to impact the smooth ramp-up of the Zimplats smelter, while scheduled maintenance of the new smelters during ramp-up will also affect the full absorption of Mimosa concentrates in the first half of the year.”
The export tax was first announced a decade ago at 15%, but it was then cut to 5% and postponed multiple times to give platinum producers time to set up a refinery. To soften the losses, miners met with ZIMRA and Treasury in November, and asked for permission to export excess concentrates. Miners want a further delay of the tax, as they fight power cuts, rising costs and weak PGM prices.
But Finance Permanent Secretary George Guvamatanga has written to Zimplats to say miners have already been given enough time to develop refining capacity.
“Parliament has indicated that no further concessions should be granted to PGM producers, cognisant of the reprieve already granted and the need to guarantee optimal value from the country’s resource endowments,” Guvamatanga wrote to Zimplats. “Thus, any review of government’s strategic plan regarding the beneficiation of PGMs to accommodate your request would be retrogressive and misaligned with national priorities.”
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