Some of the world’s largest platinum miners got an unpleasant surprise last week. When one of the world’s largest producing nations introduced some unexpected legislation for the sector.
The place is Zimbabwe. Which said that it may impose a significant new tax on platinum exports coming out of the country.
A new finance bill introduced by the Zimbabwe government includes details on the tax. Stating that exports of unrefined platinum will be subject to a 15% duty. Related: This Critical Copper Nation Has Begun Seizing Mines
Such a move had been previously proposed by the government as early as 2013. But officials had backed off the tax–stating that it would not come into effect until at least 2017.
The inclusion of the measure in the new finance bill thus came as a complete surprise. Even more so given that the bill provides no lead-up period before the imposition of the tax–with the bill proposing the 15% payments will be effective as of January 1, 2015.
The stated goal of the tax is to encourage in-country upgrading of platinum ores. But such refining would require large capital investments–and may not even be possible given the significant infrastructure and power challenges in Zimbabwe. Related: Lies And Deception In Ukraine’s Energy Sector
The result, at least initially, would likely be a greater financial burden for mining firms. Coming at a time when platinum prices have fallen to five-year lows, near $1,200 per ounce, this could be enough to push some mining operations into the red. Potentially causing shutdowns and impacting supply.
That would be a key development for the platinum market. Given that Zimbabwe is the world’s third-largest platinum producer–accounting for 7% of global supply in 2014. It also comes at a time when number-one producer South Africa is struggling–with production having fallen 16%, or 675,000 ounces, last year.
Miners in Zimbabwe said they are seeking clarity from the government on what exactly the new finance bill means. Watch for news from these firms or the government, on what the impacts will be.
Here’s to a scarce resource,
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Dave Forest
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