By Staff Writer
CITIZENS Coalition for Change Harare East Member of Parliament this week grilled Finance Minister Mthuli Ncube for maintaining lucrative tax incentives to mining companies.
The development came shortly after the second reading of the Finance Bill (H.B.9 ) by Ncube which sought to give effect to the revenue tax measures announced through the 2022 Mid-Term Review Statement delivered on 28 July, 2022.
Biti quizzed the rationale of maintaining a ZW$50 000 monthly tax free threshold for struggling citizens at a time when mining companies were enjoying tax incentives.
He described Ncube’s conduct as either a reflection of being “captured by mining interests” or certainly serving as a “slave to mining interest”.
“The first thing I find of major concern is the proposal to suspend by 12 months, the obligation of platinum houses to pay Value Added Tax on unbeneficiated platinum that is coming out of Zimbabwe.
“Ostensibly in his explanation, the reason is to give tax incentives to mining houses so that they can build a refinery in Zimbabwe. ZIMPLATS has been in this country for a period of 20 years and they have not built a refinery.
“Notwithstanding that, at the time that they signed their MOU with the Government of Zimbabwe, the Minister of Mines then was Hon. Dr. Sekeremayi, they were given massive tax incentives to build a refinery. Up to now, they have not built a refinery,” the renowned lawyer said.
Biti stressed that over and above this, platinum is Nickel of which Nickel is part of the platinum minerals group that comprises palladium, nickel, platinum, lithium, gold, silver and rhodium.
He said there are about six groups of PMGs and the country already has a nickel refinery at Bindura Nickel Corporation yet consistently, all the platinum houses have refused to use Bindura Nickel.
“As a result, you have this anomaly that platinum houses in Zimbabwe, with the key culprit being Mimosa and Unki, are exporting raw platinum out of Zimbabwe. When they do so, instead of declaring the processed by-products of platinum ore, they are only declaring platinum.
“If you are a platinum miner, you are effectively a lithium miner, palladium miner, nickel miner, gold miner, rhodium miner and a silver miner. What these mining houses are declaring, they are just declaring one mineral. Zimbabwe is being prejudiced,” he said.
The CCC legislator said global trends show that the price of the six or so PMGs – lithium is actually selling more on the back of a commodity boom yet miners back home are understating what they are getting from lithium.
He underscored that instead of providing with further incentives as Minister Ncube proposed, in terms of exporting PMGs in raw form, he should actually be raising that tax so that there is an incentive of doing two things – of constructing a refinery and taking their ore to Bindura Nickel Mine which has got the capacity of refining platinum in Zimbabwe.
Biti said the second thing that Ncube does in the statement is stating that the accumulation model is based on extraction.
“If you were to wake Cecil John Rhodes right now, he will not get lost by the political economy because we are still exporting raw wealth as we were doing in 1896.
“All the minerals which we are producing are exported yet the Minister, in his wisdom or more appropriately in his lack of wisdom, is proposing that royalty should be paid 50% in Zimbabwe dollars and 50% in foreign currency, giving them a further incentive for stealing the much needed resources of this economy.
“There is no objective reason or rational basis of why miners who are earning in US dollars should then be given an opportunity of paying their taxes in local currency. It does not make sense at all unless the Minister is captured by mining interest,” he said.
He stressed that the third concern is on his (Ncube) platinum regime royalty of 5% which not consistent with international standards considering that every platinum producing country has got a royalty of over 10%.
The CCC legislator said given the fact that these minerals are not permanent, some countries including Australia actually proposed a wealth tax beyond royalties.
“If you take ZIMPLATS, last week in your absence, I spoke, in fact the Minister spoke about 26 million ounces of platinum that are on the 104 sq km of land in Selous that were hypothecated and pledged to the Chinese, given as mortgage bond as a result of a loan of 200 million dollars that we borrowed from China in 2006.
“ZIMPLATS is sitting on reserves confirmed, validated platinum reserves of 176 million tonnes. Whatever price you use, whether it is $1000 an ounce or it is $2000 an ounce; you are talking of billions of dollars.
“These are already rich companies in terms of what they have underground. So, to continue giving them tax incentives when they are actually not properly accounting to Zimbabwe because of their continued refusal to construct a refinery in Zimbabwe which will enable Zimbabwe to know what it is getting from the gold that comes from platinum, the lithium that comes from platinum, the palladium that comes from platinum, the rhodium that comes from platinum and the silver that comes from platinum is simply not good enough,” he added.
