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Zim repays Implats unit $100m, revenues tumble

Feb 05 2016 13:17
Memory Mataranyika, Fin24

Harare - Zimbabwe says it repaid Impala Platinum’s unit in the country about $100m in overpaid royalties, dragging down earnings from the mineral royalties segment by 110%, the Zimbabwe Revenue Authority (Zimra) said on Thursday, saying this had contributed to a 7% shortfall in 2015 revenue targets.

The mineral rich southern African country is battling a severe economic downturn that has been worsened by drought conditions and suppressed commodity prices.

It has put up pressure on mining companies to build refineries inside the country as a measure to boost employment and economic activity amid projections by the World Bank that growth will be 1.5% this year, a rate government officials are disputing.

In its June 2015 quarterly operating report, Zimplats - the biggest miner in the country - said “the effect of the judgment (by a Zimbabwean court) was that the operating subsidiary overpaid royalties by $108m in respect of the period between January 2004 and December 2014”.

The announcement by Zimra on Thursday that its revenue collections from mineral royalties were set back $101m by a refund exercise showed it had repaid Zimplats.

Revenue collections

The Implats Zimbabwe unit said last week that it was fighting the government over the take-over of about 28 000ha of mineral claims the government intends to give away to new investors, with revenues for the quarter to end of December tumbling 11%.

“Gross mining royalties amounted to $82.13m. However, Mining Royalties closed the year with negative collections of $19.42m due to a refund of $101.55m that was processed during the fourth quarter of 2015,” Zimra chairperson, Willia Bonyongwe said on Thursday.

This depicted a 110% decline in mineral royalty revenue collections compared to the $191.66m that was collected in 2014.

Overall revenue collections in 2015 amounted to $3.50bn, accounting for about 25.20% of Zimbabwe’s forecast gross domestic product (GDP) of $13.89bn. The revenue authority has now focused on automation of revenue collections to increase income streams to increasingly dry government coffers.

The financial and liquidity crisis Zimbabwe is facing had already delayed bonus payments for civil servants. Finance Minister, Patrick Chinamsa said on Thursday that bonus payments will be staggered until May this year in a bid to ease pressure from crisis weary government workers, who have complained of late salary payments in the past year.

“Investor perception is also vital but sentiment is unlikely to improve in the short term. The impact of the current drought on tobacco farming will further dampen revenues for 2016 revenues, unless if there is a rebound on prices if the quality is good,” said Bonyongwe.

zimplats  |  zimbabwe  |  africa economy  |  mining  |  platinum

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