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r t i c l e s a n d N o t e s

B e n h a u s M i n i n g – A C r i t i q u e

By Kevin Burt1

In the course of her judgment in Benhaus Mining,2 Lewis ADP, with whom Mbha JA, Mocumie JA, Makgoka JA and Davis AJA agreed, said (at [41]):3

‘Benhaus submits that it does the mining work – extracting the mineral-bearing ore from the ground – and that it is entitled to deduct the capital expenditure on mining machinery from income earned from doing so. I consider that to be correct.’ I respectfully disagree. Let me explain why.

The background

The appeal before the Supreme Court of Appeal concerned whether fees paid to Benhaus for excavating and removing topsoil, blasting rock, and delivering extracted, crushed and screened chromebearing ore to its customers, which, in turn, milled, washed and melted the resultant higher concentrate ore to produce ferrochrome, were derived from ‘mining operations’. Benhaus submitted, as can be seen in the first sentence of the passage from the judgment of Lewis ADP quoted above, that it did carry on ‘mining operations’ during the 2005 to 2009 years of assessment. The South Afrian Revenue Service (‘SARS’) submitted that it did not.


The Income Tax Act, 58 of 1962, as amended, (‘the Act’) defines ‘mining operations’ and ‘mining’. The definition of ‘mining operations’ and ‘mining’ in section 1 of the Act read as follows:

‘“mining operations” and “mining” include every method or process by which any mineral is won from the soil or from any substance or constituent thereof ’ There are a few things to note about the definition. Firstly, the statutory meaning of the terms ‘mining operations’ and ‘mining’, for purposes of income tax, has been the same for over a hundred years. The meaning given to the terms in section 100 of the Income Tax Act, 41 of 1917, was the meaning given to them in section 72 of the Income Tax Act, 40 of 1925, and again in section 1 of the Income Tax Act, 31 of 1941, and it is the meaning given to them in section 1. Secondly, the terms ‘mining operations’ and ‘mining’ mean the same thing.4

‘Mining’ has never meant the mere extraction of mineral-bearing ore by every method or process by which ore may be extracted from the soil. Lewis ADP did not give any reason in her judgment why the term ‘mining’ and its equivalent, ‘mining operations’, should take that meaning when the idea of ‘winning’ (past tense ‘won’) a mineral from the soil is central to the meaning and conception of mining. It is not possible to conclude what is meant by mining, and where mining begins and ends, without an appreciation of what it means to ‘win’ a mineral from the soil. Notably, the definition of ‘mining operations’ and ‘mining’ does not refer to wining mineral-bearing ore from the soil.

As an aside, the word ‘mineral’ is not itself defined in section 1 of the Act, which is perhaps surprising, given that the application of the sections conferring a right to the deduction of mining capital expenditure depends on it.5 The meaning the word was given in

1 Kevin Burt is an advocate who practises in all areas of tax law. He is a member of The Island Group of Advocates in Johannesburg. 2 Benhaus Mining v Commissioner, South African Revenue Service 2019 JDR 0561 (SCA); [2019] ZASCA 17. 3 References to numbers in square brackets are to paragraphs of the judgment of Lewis ADP. 4 Western Platinum Ltd v CSARS 67 SATC 1 at 6. 5 Section 15(a) and 36 of the Act.


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