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Zimbabwe's Mimosa could close over platinum tax -internal document
February 9, 2015 / 5:12 PM / 3 years ago

Zimbabwe's Mimosa could close over platinum tax -internal document

HARARE, Feb 9 (Reuters) - Zimbabwe’s Mimosa platinum mine, a joint venture between Aquarius and Impala has warned of possible closure due to a government export tax imposed on unrefined platinum, according to an internal company note.

The southern African country, which has the world’s second largest deposits of platinum after South Africa, last month announced a 15 percent tax on the export of raw platinum.

An internal discussion note circulated among senior managers at Mimosa and seen by Reuters on Monday, showed the company expressing reservations over the tax.

“With the company being in a negative cash position, its shareholders will put the operation into care and maintenance, since continued operation will become unattractive,” the one-page document, dated January showed.

“The minute the shareholders understand that the company has had to pay 15 percent tax, Mimosa will be forced to go on closure,” it added.

Mimosa’s executive chairman and managing director did not immediately respond to emailed questions.

With platinum prices already depressed, the tax would eat into the profits of companies with platinum assets in the country, which include Anglo American Platinum.

Aquarius last year said in its annual report that Mimosa - which produced 110,679 ounce of platinum in its 2014 financial year - planned a $40 million five-year expansion of the mine starting this year.

That expansion could be scrapped, the document said.

Mining companies have previously argued that the volumes mined in Zimbabwe 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. (Reporting by MacDonald Dzirutwe; Editing by James Macharia)

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