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A coal mining joint venture backed by two of South Africa's wealthiest men has overturned a tax ruling that threatened to strip diesel rebates from dozens of similarly structured mining partnerships across the country.
The Supreme Court of Appeal ruled unanimously in favor of the Goedgevonden Joint Venture, a coal operation in Mpumalanga held 49 permit by Glencore Operations SA and 51 percent by African Rainbow Minerals Coal. The judgment, penned by SCA Judge President Justice Mahube Molemela, reversed a High Court decision that had sided with the South African Revenue Service.
The dispute turned on whether the joint venture could claim diesel fuel levy refunds under the Customs and Excise Act when the formal mining right was registered in Glencore's name. SARS argued that only the registered holder of a mining right qualifies for the rebate. The High Court agreed, handing ARM a significant setback.
The SCA disagreed. The court found that while the mining right was formally registered to Glencore, a legacy of its 2013 merger with Xstrata, it was explicitly structured to be exercised through the joint venture with ARM. The JV agreement was not merely incidental but formed an integral part of the mining right itself, the judges said.
The court also blocked an attempt by SARS to escalate the claim from roughly R5 million to nearly R83 million, ruling the revenue authority had overstepped its powers. SARS was ordered to pay the legal costs of both entities, including fees for two senior counsel.
Ivan Glasenberg, the largest individual shareholder in Glencore, and Patrice Motsepe, the founder and controlling shareholder of ARM, both stand to benefit from the ruling. More broadly, tax attorneys say the judgment clarifies that BEE-compliant joint ventures can qualify for diesel rebates even when they are not the formal holders of mining rights, provided they are substantively authorized to conduct mining operations.
The precedent is expected to affect similar claims across the coal, platinum and chrome sectors where joint ventures are the standard operating structure.
