Zimbabwe government has exempted lithium miner, Prospect Resources Limited from export tax for the first 5 years of operation.
Prospect operates the Arcadia Lithium Project which is in the outskirts of Harare. The Australian company also ventures into oil and gas exploration.
Prospect Resource’s Managing Director, Sam Hosack, said: “This is further confirmation that the Government of Zimbabwe is supportive of Arcadia and is focused on attracting foreign investment into the country.”
“This incentive will materially lift Arcadia’s project economics and will accelerate pay back of project finance.”
The New dispensation, in an effort to persuade investors into the mining sector, removed the indigenisation program that states that 51% of the profits from companies go to local communities.
“Our previously announced DFS and updates have all applied a 5% tax on un-beneficiated lithium to products sold,” Hosack said.
“Removing the 5% tax for the first 5 years of production will reduce operating costs per tonne, increase profitability and lift the projects Net Present Value (NPV).”
The government has also been threatening to take away mining permit of areas where operations are not taking place in what seems to be a bid to enforce companies to start extracting resources.
“The development of beneficiation facilities requires time for feasibility studies, mobilisation of resources and construction,” reads the advice from the government to Prospectus.
“In this regard, The Zimbabwean Treasury (department within MFED) has approved the exemption from the export tax of un-beneficiated lithium originating from a new mine for a period of five years from the date of commencement of mining operations,”
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