eBusiness Weekly
Golden Sibanda
BINDURA Nickel Corporation says it has agreed with the Zimbabwe Revenue Authority (Zimra) to declare a dispute over US$14 million tax liability and that the matter is now before the courts of law.
BNC said last year that it was involved in a tax dispute with the tax authorities amounting, then, to US$29 million emanating from assessments the national tax collector issued in February that year.
The assessments mainly related to historical issues pertaining to how the company was structured years ago, and issues arising from differences in the interpretation of standard commercial agreements in the mining industry.
“Following further engagements with, and submissions to the tax authorities during the year, the tax assessments were revised downwards to approximately US$14 million. Both parties agreed to declare a dispute in respect of the outstanding amount and to pursue the matter through the courts,” BNC said.
The tax dispute matter is now before the courts of law pending hearing. Except for this disclosure, BNC said, no provision had been made in this year’s financial statements with respect of this contingent liability.
The Zimbabwe Stock Exchange-listed firm said based on legal advice received to date, the company had acted within the statutes of the law. The directors of the company said they were still of the view that a positive resolution to the matter will be reached, but the timing was not certain.
Meanwhile, BNC said the smelter restart project was still at 83 percent completion. The project was put on hold due to the cash flow deficit arising mainly from the out-turn on the low nickel price.
The average LME nickel cash settlement price fell by 5,6 percent to US$12 388,34 per tonne (US$5,62 per pound) compared to US$13 278,84 (US$6,02 per pound) in the same period in 2018.
The nickel demand that was expected to come from electronic vehicles (“EV”) did not materialise as it was now realised that the demand had been premature.
However, this demand was now expected to increase significantly by 2025.
BNC said the London Metal Exchange nickel price has averaged US$12 000 per tonne since the Project commenced in 2015, compared to the average LME price of US$16 000 that was forecast then.
“With the promising global nickel price outlook, plans are afoot to complete the project in the near future,” BNC said in the statement accompanying its financials for the year to December.
Demand for nickel in the steel sector was muted, despite an increase in the usage of nickel which was attributable to the production of high grade 300 series steel.
Supply remained robust as more Indonesian mills either ramped up or came into production.
In terms of financial performance, the nickel extractors reported a profit after tax of US$13,5 million for the year ended March 31, 2019, compared to the US$5,8 million recorded in the prior year.
The firm’s revenue had modestly grown by 1 percent to US$54 million from US$53,6 million in the comparable period last year.
During the period under review operating profit jumped to $21,3 million which is 139,3 percent in the positive from $8,9 million realised in 2018, mainly attributable to exchange gains.
