MAC: Mines and Communities

Miners fight new fees structure in Zimbabwe

Published by MAC on 2012-02-28
Source: Zimbabwe Herald, Reuters (2012-02-26)

Sometimes, it seems a goverment just can't win...

In order to increase income, Zimababwe proposes to hike mining fees - and that's inevitably upset the industry, which says it will make their businesses unviable.

At the same time, some supporters of "indigenous empowerment" for the country's smaller-scale miners also deplore the move.

They claim it will jeopardise betterment of the "standards of living for the people of Zimbabwe".

Meanwhile, Impala Platinum's Zimbabwe unit, Zimplats, has been ordered to transfer 29.5 percent of its shares to a state-run fund, to comply with empowerment laws.

Zimbabwe's new fees will cripple mines - industry

Reuters

20 February 2012

HARARE - Zimbabwe's new mine licence fees and resource rentals will significantly raise the cost of mining and threaten the sector's viability, with as much as 60% of mining revenues going to the government, an industry body said on Monday.

The southern African country hiked pre-exploration fees for most minerals by as much as 8,000% in January, with registration charges for platinum and diamond claims going up to $2.5-million and $5-million, respectively, in a move it says is meant to curb the speculative holding of mine titles.

Miners now must also pay annual ground rentals ranging from $500 per hectare for chrome to $3,000 per hectare for diamonds, according to a government notice.

The Zimbabwe Chamber of Mines told a parliamentary committee hearing that the new fees, coupled with royalty increases of 7.5% for gold and 10% for platinum announced in the 2012 budget, would seriously hurt miners who have yet to fully recover from a decade-long economic crisis.

"The fee structure is unworkable. The industry is already overburdened by the totality of statutory charges, royalties, levies and commissions," the chamber's VP, Allan Mashingaidze, told the Parliamentary committee.

"It's estimated that 60% of every dollar earned in revenue goes to the government, making Zimbabwe one of the most expensive countries to mine."

Industry players estimate the increase in fees could cost the sector up to $1-billion, sending miners close to bankruptcy.

"We believe the way forward is for government to suspend the new charges, pending consultations with the industry," Mashingaidze added.

The mining industry, which has overtaken the stricken agriculture sector as Zimbabwe's main foreign exchange earner, contributed the bulk of the country's $4.4-billion export earnings in 2011.

Finance Minister Tendai Biti's $4-billion budget for 2012 is anchored by an expected $600-million in revenues from the alluvial Marange fields, where the government has a 50% shareholding in all five mines licensed to operate there.

Zimbabwe has the world's second-largest platinum reserves after South Africa, as well as significant gold, diamond, coal, iron ore and chrome resources.

The world's largest platinum miner, Anglo American Platinum, and number two producer Impala Platinum both have operations in Zimbabwe, while global giant Rio Tinto has a diamond mine there.


Zimbabwe: Miners Say New Fee Structure Uncompetitive

Zimbabwe Herald

21 February 2012

New mining fees gazetted last month will kill participation of indigenous people and make the country uncompetitive for investors, the Parliament Portfolio Committee on Mines and Energy heard yesterday.

The committee also heard that some of the fee increases were illegal as they were not provided for under the Mines and Minerals Act.

Representatives of the Zimbabwe Chamber of Mines and Zimbabwe Miners Federation yesterday urged Government to reverse the increases. Some of the rates went up by 5 000 percent. They said reversing the increases would help Zimbabwe benefit from its mineral resources.

"The new fee structure established, in our view is unworkable, it will halt new exploration work and push out small scale mining operations. It will impose a new burden on existing mines," the second vice president of the Chamber of Mines Mr Allan Mashingaidze said.

"The mining industry has had no mineral exploration for more than 10 years. If the mining industry is to grow, there is need to set charges that are comparable to those charged in other countries," he said.

Mr Mashingaidze said the new structure will result in miners paying 60 percent of each dollar earned as revenue in taxes, fees and licences making it unfavourable for investment.

He said while the new ordinary prospecting fees had been set at US$1,000, in Zambia it was US$314, Tanzania US$100 and Nigeria US$126.

The special prospecting licence set at US$3,000 in Zimbabwe costs US$279, 57 in Zambia while in Tanzania, Nigeria and Namibia it is free.

Chamber of Mines immediate past president Mr Victor Gapare said new charges like the special prospective licence fees, diamond application fee and registration fee were not provided for in the law.

ZMF secretary Mr Wellington Takavarasha said most small scale miners were into gold production and will be forced to close by the tariff regime.

"Seventy percent of our miners are into gold and the mining ground levies and the levies charged for ore removal permits are a punishment to indigenous players.

"The new fee structure also says a prospective licence is for a particular area when in the past it used to be for the whole country, this is not provided for in the law," Mr Takavasha said.

Zimbabwe Indigenous Economic Empowerment Organisation president Mr Paddington Japajapa said the new licence structure was against the letter and spirit of the indigenisation policy.

"The new fees go against Government policy of indigenisation meant to uplift the standards of living for the people of Zimbabwe," he said.

He said it was better to have separate fee structures for local and foreign investors.

The new fee structure is contained in Statutory Instrument 11 of 2012 under the Mining (General) (Amendment) Regulations, 2012 (No.16).


Impala's Zimbabwe platinum unit given 2 weeks to detail handover of 29.5% stake

Reuters

26 February 2012

HARARE - Impala Platinum's Zimbabwe unit, Zimplats, has been ordered to transfer 29.5 percent of its shares to a state-run fund in order to comply with local empowerment laws, according to a letter written by a government minister.

Zimplats, 87 percent owned by Implats, had failed to comply fully with the law, which seeks to localize at least 51 percent of shares in all foreign-owned firms, empowerment minister Saviour Kasukuwere wrote in a letter seen by Reuters on Sunday.

Failure to present the government with a plan to transfer the holding within two weeks would result in unspecified "enforcement mechanisms", the letter added.

Kasukuwere has in the past threatened to cancel the mining licences of firms that do not comply.

On Friday, Implats said Zimbabwe had rejected part of its empowerment plan, along with that of Mimosa, its 50-50 joint venture platinum mine with Aquarius Platinum.

Both mines have recently launched community share ownership trusts, to which they each gave 10 percent shareholdings each.

Zimbabwe's empowerment laws, being championed by President Robert Mugabe, have been criticized by Prime Minister Morgan Tsvangirai, his partner in a shaky coalition government formed three years ago after violent and disputed elections in 2008.

Analysts say the law is holding back the impoverished southern African country's economic recovery from a decade of turbulence and contraction.

Critics link the empowerment push to Mugabe's plans to hold elections this year. (Reporting by Nelson Banya; Editing by Ed Cropley)

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