Govt exempts army-linked platinum firm from paying tax

January 28, 2021

Brenna Matendere

Finance minister, Mthuli Ncube, has exempted a mega-million platinum mining company jointly owned by the army and Russian investors, Great Dyke Investments (Pvt) Ltd, from paying income tax for the next five years.

The order is contained in an extra-ordinary gazette promulgated on Wednesday (27 January, 2020).

The effect of the order, according to the gazette, “is that the receipts and accruals of Great Dyke Investments (Private) Limited are exempted from…income tax for a period of five years”.

Investigations by Grazers News revealed that Great Dyke Investments was commissioned by the late former President Robert Mugabe on 16 September 2014.

It is located in Darwendale, a small town in Mashonaland West province-, some 63 kilometres from Harare.

On its website, the company says it intends to pump in US$2 billion into the platinum mining business and projects to profitably mine in the area for the next 40 years.

In November 2018, the Zimbabwe Mining Development Corporation (ZMDC) board chairperson, Peter Chimbodza, told the parliamentary portfolio committee on Mines that the army had a 30 percent stake in Great Dyke Investments.

According to him, Afromet, a Russian outfit, held a 50 percent while a local entity, Peneast, owned the other 50 percent.

Peneast comprises two companies, Old Stone which is owned by the Defence ministry at 30 percent, and ZMDC with the remaining 20 percent stake.

Commentator Alex Magaisa, a law teacher in the UK, took to Twitter and described the Finance minister’s order as unfair.

“Another statutory instrument, another favour to the privileged. Who owns Great Dyke? If it’s good (tax exemption) for Great Dyke, why is it not good for other players in the sector?” tweeted Magaisa.

In 2020, government rejected a tax exemption request from small-scale miners who constitute the Zimbabwe Miners Federation (ZMF).

The federation had indicated that the Covid-19 national lockdown decreed by President Emmerson Mnangagwa in March 2020 affected their profitability and, therefore, they must be remedied through tax exemptions.

Dosman Mangisi, the ZMF spokesperson, told Grazers News that the miners were still paying the mandatory taxes despite the difficult circumstances they were operating under.

The Zimbabwe Chamber of Mines (ZCM) chief executive officer, Isaac Kwesu, said he was unable to comment on behalf of his organisation, on the tax exemption issued to Great Dyke Investments, because of its opacity.

“Special lease agreements between government and mining players are tricky because they are privately handled.  I don’t know the terms and agreement entered into by the two parties,” he said.

The Zimbabwean army already has commercial interests in numerous investments, among them controversial diamond entity, Anjin Investments.

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