New Zimbabwe.com

Exploration fee adds to miners’ burden

THE government has proposed a new mining fee to boost exploration in the country, a move that is likely to further strain miners’ bottom lines, and which the industry is likely to reject.
Companies in the sector are already complaining about the country’s mining fee regime and royalty structure.
The industry is unhappy with the new mining fee regime introduced by the government earlier this year. A $5m registration fee for diamond mining has been scrapped.
On May 21, Mines and Mining Development Minister, Walter Chidakwa told mining industry executives that the government was proposing a new levy the proceeds of which would be used to finance a government exploration company.
He proposed that “… three percent of turnover goes to exploration and we have to make it mandatory”.
This is despite complaints from the industry that mineral royalties in the country are high. Gold mining companies already pay 7% while platinum miners pay 10% in royalties.
The mines ministry also slashed platinum prospecting licences from $500,000 to $500 while registration fees for special platinum blocks are now $750 000, significantly down from $2.5m.
Although it is still a proposal, three mining executives attending the conference said it would work against the miners as it pushed up their costs. They said it was the state’s obligation to fund a state exploration company.
“This is a new fee on top of the multitude of taxes, royalties and fees which we are saying are already high and make Zimbabwe uncompetitive,” said one of them.
The government has resuscitated a state exploration company tasked to quantify the mineral resources of the country, with Chidakwa saying it was important for the government to know the true value of mineral concessions the country holds.
“We want to see production going up. I will be disappointed if the figures for this year are lower than what they were last year,” said Chidakwa.
The government is also proposing mineral securitisation to help fund its ambitious economic revival and social upliftment blueprint.
The setting up of an exploration company and government moves to have it funded from contributions by mining companies is aimed at tabling its mineral reserve values in order to get financing.
The country, which has a debt overhang of around $8bn, cannot access further financing.Advertisement