Zimbabwe Mines Body Says Export Tax Threatens Platinum Industry

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By Bloomberg on February 27, 2014. No Comments

A proposed 15 percent levy on Zimbabwe’s platinum exports equates to a “punishment” that threatens the industry, the country’s mining body said.

The government proposed a tax on shipments of unrefined platinum in December that would apply from Jan. 1 this year.

The levy would be “ill-timed, distortionary and reduces export competitiveness,” the Zimbabwe Chamber of Mines said in a document submitted to a parliamentary committee and obtained by Bloomberg News. “With the platinum price already depressed, compounded by other challenges, this will hamper down viability of the sub-platinum sector.”

Zimbabwe, with the world’s biggest platinum reserves after South Africa, has three operating mines, including local units of Anglo American Platinum (AMS) Ltd. and Impala Platinum (IMP)Holdings Ltd. Producers submitted plans for refinery units in January after the government threatened to ban exports if they fail to complete a plant by the end of the year.

The industry needs as much as $5.3 billion if it is to expand to more than 500,000 ounces of output and to construct refineries to process platinum group metals and industrial metals extracted from the same ore bodies, according to the chamber. Zimbabwe produces 430,000 ounces of the precious metal a year, according to a Jan. 3 letter from the government to the producers obtained by Bloomberg News.

Export restrictions make investors assess the risk in an industry differently, the chamber said. Another plan, to seize unworked claims after three years, “may not be practical nor desirable,” it said.