Glencore and Motsepe venture loses appeal against Sars

A coal joint venture between mining giant Glencore and billionaire Patrice Motsepe’s African Rainbow Minerals (ARM), has suffered a blow after the North Gauteng high court refused leave to appeal its earlier decision that it was not entitled to the diesel rebates it claimed from the South African Revenue Services (Sars).

 The joint venture controls the Goedgevonden mine in the coal-rich Mpumalanga.

The mine is a thermal coal mine established in 2006.

Its 6.7-million tonnes annual capacity is split almost equally between Eskom and exports through the Richards Bay Coal Terminal.

Goedgevonden has a long-term coal supply agreement with Eskom to supply about 60-million tonnes of thermal coal, with 3.5-million tonnes annually destined for Majuba coal-fired power station.

The joint venture and Sars could not agree on the treatment of the tax rebates, as the tax agency argued that the joint venture was not entitled to receive the diesel refund because it did not have a valid mining right in its name.

The mining right belongs to Swiss-based Glencore, which took ownership of the mining rights when it merged with Xstrata in 2013, creating a behemoth worth about R1.5-trillion on the JSE.

The judge found that there was no reasonable prospect that another court would come to a different conclusion.

“Between the parties, it was common cause that the mining authorisation was not issued to the [joint venture] but to Glencore and it is therefore of no consequence as to whether this court relied on the old rules or the new rules in its interpretation as the entity registered for diesel rebates was simply not the holder to qualify for such rebates,” the judge ruled.

“To expect the commissioner to interrogate the terms of a mining right, which has been registered in someone else’s name, will be placing too onerous responsibility on the commissioner.

“This court is in agreement with the views so expressed by counsel for the respondent, that the above-mentioned grounds without more do not constitute a compelling reason why the appeal should be heard.”

The decision means the joint venture will have to pay Sars millions of rands, unless its legal team led by legal eagle Wim Trengove, SC, decides to petition the Supreme Court of Appeal for recourse.

Glencore holds a 49% stake in the joint venture and ARM has a 51% interest.

ARM, which is controlled by the Motsepe family, is worth about R43-billion on the JSE.

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