Report cools fears of invoicing problems in industry

Discrepancies in SA’s reporting of trade data on silver, platinum and iron ore identified by the UN Conference on Trade and Development (Unctad) could not be attributed to illegal activities but to other factors, Eunomix CEO Claude Baissac said on Tuesday.

Baissac was speaking at the release of the third Eunomix report commissioned by the Chamber of Mines to examine Unctad’s findings.

Henk Langenhoven, the Chamber of Mines’ chief economist, said the allegations of mis-invoicing had serious implications for SA’s resources companies and cast doubt on the efficiency of the country’s customs authorities.

“Accusations of extensive mis-invoicing and other illicit financial flows are feeding a growing lack of trust between key stakeholders in the mining industry.”

In July 2016, Unctad published its first report on misinvoicing in the resources sector in several countries including SA and a second updated report was released in December.

Trade mis-invoicing refers to the disparity between a country’s reported exports and the import statistics of the target country. Where the value of imports is more than 10% above the export comparison, it is regarded as excessive, since the 10% differential is assumed to be the cost of transport, insurance and duties.

In previous reviews of Unctad’s findings, Eunomix found the real discrepancy in SA’s gold export data was $9.8bn, not Unctad’s $78.2bn, probably reflecting the fact that about half of Rand Refinery’s output represents gold refined for other countries. They recorded the returned gold as imports, but SA did not record it as an export.

Eunomix’s third report has reviewed Unctad’s findings of $24bn of mis-invoicing in the silver and platinum sectors and $620m in iron ore.

Baissac said the discrepancy that emerged by comparing Department of Trade and Industry data on silver and platinum with that of SA’s trading partners was about $15bn and it probably arose because platinum was mined in Zimbabwe and refined in SA.