Tharisa Minerals wins court case over mining royaltes against Sars

Tharisa Minerals, a subsidiary of the South African mining group Tharisa, has scored a significant legal victory in its dispute with the South African Revenue Service (Sars) over mining royalties.

The Tax Court of the Republic of South Africa has ruled in favor of Tharisa Minerals in a case related to the calculation of mining royalties under the 2008 Mineral and Petroleum Resources Royalty Act. The court set aside Sars’s assessments for the 2015 and 2017 years of assessment, ordering the revenue service to review its methodology for determining Tharisa Minerals’ gross sales and earnings before interest and tax (EBIT). Specifically, the court ruled that Sars must factor in "operational realities" such as the grade recovery curve used by the company.

The judgment, which affects both the 2015 year of assessment and all subsequent years, could have significant financial implications for the company. While the ruling is seen as favorable for Tharisa, Sars retains the right to appeal the decision. A redacted version of the judgment was published on the Sars website on October 3, 2025.

At the heart of the dispute were the calculations for platinum group metals (PGMs), with Tharisa contesting Sars's adjustments to the gross sales value of PGM sales. Sars had increased the gross sales value by assuming a minimum platinum grade of 150 parts per million, applying a linear adjustment to the average PGM grade. Tharisa argued that this "grossing-up" method was flawed and did not accurately reflect the costs involved in beneficiating the concentrate to the required standard.

As of September 30, 2024, Tharisa had set aside a provision of $56.8 million (R976m) for the disputed royalties. The company is now in the process of recalculating its mining royalty liabilities and assessing the impact on its cost of sales and income tax. While the company expects the ruling to have a materially favorable effect on earnings per share, detailed calculations are still underway. An earnings guidance update will be provided once this process is complete.

In a statement, Michael Jones, Tharisa’s chief financial officer, commented on the judgment, noting that the case involved highly technical issues, aligning complex metallurgical processes with the provisions of the Royalty Act. He said the ruling provides clarity for future royalty calculations and reinforces the need for transparency in the legislative framework.

“This judgment provides certainty for the life of mine in determining mining royalties, particularly in terms of the unique characteristics of our ore body,” Jones said. “Importantly, it confirms that royalties should not be levied on notional or artificial income, which is particularly detrimental to producers mining lower-grade ore bodies. While the process has been lengthy, the outcome vindicates Tharisa’s position.”

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