SMALL scale miners have rejected as “ridiculous and unsustainable” the recent increase in various mining fees by between 500 and 5000 percent warning the development could drive many out of business and hinder much-needed new investment.
Among various other charges, the government has hiked registration fees for platinum claims to US$2,5 million from $500 in addition to an application fee of US$500 000, up from US$200. Diamond claims will now cost US$5 million, up from US$1million.
However, the Confederation of Zimbabwe Miners (CZM) which represents small-scale operators said the new charges could drive many of its members out of business and undermine the government’s empowerment policies.
“These fee increments are ridiculous and unsustainable and they will force miners out of business,” CZM president Rangana Chauke wrote in a letter to Mines Minister Obert Mpofu seen by the Sunday Mail.
“We are kindly asking for suspension and withdrawal of the new fees until we discuss and come up with a sustainable structure. In the meantime we should revert to the old fees, which are already high.”
Large scale operators have also warned that the levy increases could worsen the many challenges companies are already facing and threaten the viability of a sector credited with driving the country’s economic recovery.
“Over the last few years we have seen increases in royalties for precious metals, particularly gold and platinum,” Chamber on Mines president Winston Chitando said recently.
“If these upfront payments are allowed to continue increasing very little will be left between the unit price and the cost of production for distribution between government, communities and investors.”
Several companies have also warned that they could likely take multi-million dollar hits from the new charges.
“If implemented as reported, these revised fees could result in an increase of 50,000 percent compared to the current fee regime and will have a huge impact on all mining companies,” said Aquarius Platinum which jointly owns the Zvishavane-based Mimosa Platinum Mine.
“Mimosa might be faced with an additional multi-million dollar charge. Discussions are currently being conducted through the Chamber of Mines with a view to achieving reduced and sustainable mining fees.”
The government insists the new charges are needed to curb speculative holding of mining claims as well as boost state coffers.
Officials say the mining sector grew by 25.8 percent in 2011 and project 15.9 percent expansion in 2012 with increased output forecast for all minerals.