Assmang, a joint venture between Patrice Motsepe’s African Rainbow Minerals (ARM) and Assore, is battling the South African Revenue Service (Sars) over diesel rebates at one of its mines, in a dispute that has found its way to the North Gauteng High Court.
Assmang mines manganese ore at the Black Rock mining complex (Nchwaning and Gloria mines) and iron ore at Khumani and Beeshoek mines, all situated in the Northern Cape.
The mining house also produces manganese alloys at Cato Ridge Works and Cato Ridge Alloys in KwaZulu-Natal and Sakura Ferroalloys in Malaysia.
The bulk of its production is exported to Asia, Europe, India and the US.
The dispute between Assmang and Sars relates to the “wet/dry contracting” and its implementation and whether the company kept documents and logbooks to determine whether the rebates are “eligible or non-eligible”.
The case turns on whether the rebates claimed were on a wet or dry basis. In mining, wet hire includes machinery and an operator, while dry hire provides machinery only.
Diesel used in dry hire attracts diesel rebates.
The diesel rebates Assmang feels entitled to relate to the Khumani Iron Ore Mine. The mine is Assmang’s primary iron-ore producer. It was originally designed to produce 10-million tonnes of export-quality iron ore each year, but it has now raised its capacity to produce 14 million tonnes.
The iron ore mined at Khumani is exported through the Saldanha Bay iron ore bulk terminal.
In this matter, Assmang called as a witness the financial manager at Khumani, Bruce Smith. He gave evidence on how the systems operated at the mines – the conversion of wet to dry rates, the contracts and the controls of the diesel usage and the operation of the Liquid Automated System (LAS System).
Assmang’s second witness, Edward Grabler, is the owner and managing member of the contractor at Khumani, Blue-Sky – which transports export material produced at Beeshoek Mine to Khumani Mine.
Assmang also called auditor and mining expert Charles Stride. Stride analysed the source documents and gave evidence on the LAS system, reflecting on how the use of diesel by Assmang was controlled and used by its contractors.
Sars argued before the court that it refused the multimillion rands rebate claims relating to the Beeshoek Mine on the basis that the fuel was supplied for Beeshoek from Khumani and Khumani was making a claim for the usage of Beeshoek.
Presiding judge Rochelle Francis-Subbiah ruled in Sars’ favour.
“For the foregoing reasons, I am satisfied that although the applicant (Assmang) was registered as a “user” in terms of the act, the purchases of diesel on which the refunds were claimed were not “eligible purchases” for the purposes of Note 6 as the diesel was used in mining activities carried on by the applicant on a wet basis and failed to keep proper records,” reads the judgement handed last week.
