Relief for ZIMASCO
….. as High Court exempts the miner from paying royalties
CLOUDINE MATOLA
The High Court has spared Zimbabwe Mining and Smelting Company (ZIMASCO), the country’s largest producer of ferrochrome, from paying more than US$10m in royalties, which is a significant relief to the resources firm, Business Times can report.
However, ZIMRA, which had ordered the mining company to pay that sum following its assessment of the miner’s tax affairs, has suffered a major blow as a result of the High Court’s verdict.
ZIMRA claimed that ZIMASCO had computed royalties using an inaccurate methodology between January 2019 and September 2022.
The High Court has since ordered ZIMRA to refund ZIMASCO for the amounts of US$2 485 183.83 and ZWG389 606 502.95.
As mineral-bearing products, chrome ore concentrates, and ferrochrome were found to be exempt from royalties during the period under review by the court.
Furthermore, it was emphasized that royalties on these kinds of products only started to apply following the Finance Act of 2021.
After hearing both parties’ counsel, High Court judge Justice Paul Musithu granted the application by ZIMASCO, ruling that the mining company should not pay mining royalties for chrome ore concentrates and ferrochrome since they are mining bearing products.
“Resultantly it is ordered that the application be and is hereby granted with costs,” ruled Justice Musithu.
He continued: “It is declared that chrome ore concentrates, and ferrochrome are mineral bearing products and no mining royalties are payable on their disposal.
“Consequent to paragraph 2, the applicant is not liable to pay mining royalties to the respondent on the chrome ore concentrates and ferrochrome which the
applicant disposed during the period 1 January 2019 to 30 September 2022.
“The schedules issued by the respondent to the applicant on 24 March 2023 for the total sums of ZWG881 544 511.00 and US$10 523 347.00, as shortfalls of mining royalties be and are hereby set aside.
“The respondent is ordered to refund the sums of ZWG389 606 502.95 and US$ 2 485 183.83 and any other amount paid by the applicant to the respondent in discharging the mining royalties in the total sums of ZWG 881 544 511.00 and US$10 523 347.00, as the shortfall of mining royalties and penalties due by the applicant for the period January 2019 to September 2022.”
