The government of Zimbabwe has suspended a 15% tax on raw platinum exports ceding to companies request to have at least two more years to set up smelters and refineries.
According to the state-owned Herald newspaper, the levy — imposed by President Robert Mugabe in January— aimed to encourage local processing of the metal.
While Zimbabwe holds the world’s second-largest platinum reserves after South Africa, analysts believe the volumes mined there are not high enough to make construction of multibillion-dollar refineries 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.
Even if such plants are built, analysts believe the risk that they may be nationalized at some stage is high.
With platinum prices already depressed, the tax was threatening to eat into the profits of companies with platinum assets in the country, including Anglo American (LON:AAL), Impala (JSE:IMP) and Aquarius Platinum (ASX:AQP).
Some of them — Impala’s subsidiary Zimplats, Mimosa and Unki — decided to halt exports in April, a move that forced Mines and Mining Development Minister Walter Chidhakwa to review the industry’s outcry regarding the tax’s effect on their businesses, AllAfrica reported.