Zimbabwe Platinum Mines (Pvt) Ltd v Zimbabwe Revenue Authority

Zimbabwe Platinum Mines (Pvt) Ltd ("the applicant") is a mining company engaged in mining and processing platinum group metals and base metals. It operated under a Special Mining Lease until 31 May 2018, then migrated to a General Mining Lease. The applicant entered into an agreement with Impala Platinum Limited for the exclusive supply of matte and concentrate (mineral-bearing products at intermediate stages of processing). The applicant paid royalties based on the fair market value of these intermediate products (90% of market price for matte, 87.5% for concentrate). On 13 September 2018, the Zimbabwe Revenue Authority ("respondent") queried whether the applicant was computing royalties on the correct base, asserting it should be the gross market value without deductions. Following Finance Act No. 8 of 2020, which stipulated royalties calculated on gross fair market value without deduction for processing costs, and subsequent Finance Act No. 7 of 2021 (effective 1 January 2022), which recognized various stages of production for royalty computation, the respondent computed royalty shortfalls for the period 1 June 2018 to 31 December 2021 totaling ZWL 2,032,517,190.25 or USD 7,100,551.79.

• Whether the Finance Act 8 of 2020 (prior to amendment by Finance Act 7 of 2021) made provision for payment of royalties on mineral-bearing products such as matte and concentrate
• Whether royalties should be calculated on the face value of the invoice or the gross market value of refined minerals
• Whether the applicant was liable to pay royalty shortfalls for the period 1 June 2018 to 31 December 2021
• The effect of retrospective amendments to the definition of 'mineral' in the Finance Act
• The proper approach to statutory interpretation of fiscal legislation

1. The application succeeds. 2. The Finance Act 8 of 2020 (prior to amendment by Finance Act 7 of 2021 effective from 1 January 2022) read with the Mines and Minerals Act makes a clear distinction between a 'mineral' and a 'mineral-bearing product' and that no specific provision was made for payment of royalties on 'mineral-bearing products', including 'Matte' and 'Concentrate'. 2.1. Consequently, the Applicant is not liable to pay royalties to the Respondent on the Matte and Concentrate which the Applicant sold to Impala Platinum Limited during the period 1 June 2018 to 31 December 2021.

In matters of taxation and fiscal obligations, no tax or royalty can be imposed without clear and express statutory authority. For a royalty obligation to be legally enforceable, the relevant statute must explicitly identify the subject of the royalty and prescribe the precise rate or a clear mechanism for determining that rate. Without such clarity, no obligation can arise. Fiscal legislation must be strictly interpreted, and any ambiguity or silence must be resolved in favor of the taxpayer. A retrospective amendment to a definition of 'mineral' to include 'mineral-bearing products' cannot substitute for the absence of a fixed royalty rate during the relevant period. Liability to remit royalties must rest on a clearly prescribed rate in an effective charging provision. Where the Finance Act distinguishes between 'minerals' and 'mineral-bearing products' and no royalty rate has been prescribed for mineral-bearing products during a specific period, no royalty obligation exists for that category during that period.

The court observed that even if the wider, purposive approach to statutory interpretation were adopted, it would lead to the same conclusion, as it cannot be reasonably inferred that the legislature intended to bunch mineral-bearing products and refined minerals under the same royalty rate. The court noted that the legislature subsequently clarified this by the amendment in Finance Act No. 7 of 2021, which recognizes the various stages of beneficiation in the computation of royalties. The court expressed difficulty in understanding why the respondent persisted with its argument in the face of the clear and authoritatively binding Supreme Court decision in ZIMRA v ZIMASCO.

This case establishes important principles regarding the interpretation of fiscal legislation in Zimbabwe, particularly mining royalty obligations. It affirms that tax and royalty obligations are strictly statutory in nature and cannot arise by inference or implication. The judgment reinforces the principle that no tax or royalty can be imposed without clear and express statutory authority, including a prescribed rate. It clarifies that retrospective amendments to definitions cannot create fiscal obligations that did not previously exist without accompanying charging provisions. The case is significant for the mining industry as it clarifies that mineral-bearing products (intermediate processing stages) are distinct from final refined minerals for royalty purposes, and that royalties can only be levied where specific rates have been prescribed. The decision emphasizes the strict construction rule in tax law that ambiguity must be resolved in favor of the taxpayer.