Impala Unit Says Tax Demand Threatens $469 Million Expansion

Zimbabwe Platinum Mines Ltd. (ZIM), a unit of Impala Platinum Holdings Ltd. (IMP), said a tax demand will delay the company’s planned $469 million expansion program to boost output by 50 percent.

“The revised tax assessment puts pressure on Zimplats’ cash flows,” Chief Executive Officer Alexander Mhembere said in a written response to Bloomberg questions. “Some aspects of the project will be postponed.”

Zimplats had a tax agreement with the government that gave it certain concessions over the treatment of capital expenditure. The Zimbabwe Revenue Authority, known as Zimra, has ruled that the concessions weren’t written into law and so they no longer apply.

Mhembere said the company doesn’t plan to appeal the $33.8 million tax demand and has “agreed to the re-calculation.”

“However, we are in discussions with Zimra on the payment of interest and penalties on the principal amount,” the CEO said. “We are keen to resolve this issue as soon as is possible.”

Mhembere said the Zimbabwean government and Zimplats’ major shareholder, Impala Platinum, reached an agreement on the implementation of black-ownership laws in March.

“A joint technical team was established then to work on the details, therefore there is no question of imposition of terms,” he said.

To contact the reporters on this story: Brian Latham in Johannesburg at in Harare at blatham@bloomberg.net. Godfrey Marawanyika in Johannesburg at gmarawanyika@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin in Johannesburg at asguazzin@bloomberg.net.