Consulting group Deloitte believes it unlikely that South African Finance Minister Nhlanhla Nene will introduce new mining taxes or increase mining’s prevailing tax burden in his upcoming maiden Budget speech on February 25. Read on page 7 of this edition of Mining Weekly of Deloitte instead expecting Nene to acknowledge mining’s stagnation and indicate the future steps that government is likely to take to stimulate mining. It would, in any case, be folly to make changes ahead of the recommendations of the Davis Tax Committee, as well as the tweaking of the Mineral and Petroleum Resources Development Act Amendment Bill, which President Jacob Zuma last month referred back to the National Assembly, citing possible unconstitutionality.

Such fiscal foresight appears to have been lost on the countries north of South Africa, with incoming Zambian President Edgar Lungu blocking his ears to the warnings that his country’s onerous new mineral royalty tax regime seriously threatened the economic viability of several mines. Read on page 19 of this edition of Mining Weekly of Zambia seemingly failing to have learnt from its 2008 windfall tax debacle, which left many out of work and which had to be ignominiously withdrawn a year later. Surely by now, everyone in Zambia must know that a tax burden on the mining industry, without taking into account the cost of production and unpredict- ability of the copper price trend, will inevitably lead to mine closure, job loss and adverse knock-on effects.

Also constantly failing to understand the destructive economic consequences of government uncertainty is the Zimbabwean government, which, at the time of going to press, had sowed confusion among the country’s platinum mining companies around the issue of taxing the export of mined products. Platinum companies Impala Platinum (Implats) and Aquarius Platinum were chasing their tails last Friday as they put out Stock Exchange News Service announcements on the failure of Zimbabwe to defer the 15% revenue export tax on unrefined platinum, as had been expected. Investec Securities complained in a note that Zimbabwe was inflicting greater hardships on an already struggling industry and Liberum’s mining analysts warned the tax would have a “disastrous” effect on profitability. At the time of going to press, Implats was seeking clarity from the authorities. For Aquarius Platinum’s Mimosa mine, the implied impact on its second-quarter results would be to reduce cash margins from $182/oz to $17/oz. It appears, further, that the export tax will not necessarily be tax deductible against corporate tax. Aquarius cautioned that, if platinum mining companies complied by building processing plants within Zimbabwe, the risk of those assets being nationalised would be raised on the basis of it being far easier to sell a final product overseas than a raw product.