Zimplats says paid $447 million in taxes, Q3 profit up 76pct

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By the Source on April 30, 2014. No Comments

Zimbabwe Platinum Mines (Zimplats) on Wednesday said it has paid $447 million to government between 2002 and March to year in the form of levies, after generating nearly $3,6 billion from its operations in that time.

The majority of its expenses, $1,338 billion or 37 percent were operating expenses while it also spent $1,190 or 33 percent in capital expenditure to expand and maintain its operations.

The government’s share has accounted for the third largest chunk of its bill, at 12 percent, in the form of income tax, royalties, customs duties and pay-as-you earn (PAYE), Zimplats said in a third quarter update for the period up to March 31.

Employment costs accounted for $220 million or six percent of the costs while the company said it had advanced $34 million to the central bank, which government will repay through the issue of five-year Government bonds which guarantees an annual return of 5 percent.

Shareholders received dividends of $63 million during the period where its operations generated $3,598 billion in revenue.

Operating profit for the quarter jumped 76 percent to $36 million after revenue increased by nine percent due to higher metal prices.

The company’s local spend, excluding payments to government and related institutions, fell 16 percent to $51 million because of the reduced work on the Phase 2 expansion project. Total payments to government in direct and indirect taxes fell to $20 million from $29 million in the previous quarter.

However, Zimplats’ appeals against the tax penalties and the review of the interest on prior years’ tax liabilities are still pending in the courts, it said.

Zimplats lost a case against Zimra in 2012 over a revised tax invoice of $33, 8 million after the tax authority disallowed its claim to full capital expenditure as a deduction, a practice the company said stemmed from written undertakings it received from government under the mining agreement signed in 2001.

The company is still engaged in talks with government over its empowerment arrangement.

Implats which owns 87 percent of Zimplats, signed a preliminary  January 2012 deal to sell part of its stake to local investors to meet the statutory black ownership target of 51 percent.

Zimplats commenced production at the Ngezi opencast mine in December 2001 after purchasing BHP’s interests in the Hartley Platinum and the Mhondoro Platinum Joint Ventures which included a concentrator and smelter.

The company initiated the Ngezi Mine and Selous Metallurgical Complex (SMC) project in 2001 and a new concentrator at Ngezi was commissioned in July 2009, reaching a full production capacity of two million tonnes per annum in October 2009.

In 2010, it began the Ngezi Phase 2 expansion involving the development of a new two million tonne underground mine, an additional concentrator and associated infrastructure at a cost of $460 million.

At completion in 2015, it will push Zimplats’ refined platinum production to 270,000 ounces.  The project is the second stage in a series of planned expansions to grow the business.