By Mary Taruvinga, Senior Reporter
MINING companies in Zimbabwe will now pay royalties to the government in the form of minerals as a percentage of the mined resources effective October 1, President Emmerson Mnangagwa has said.
A mining royalty is a sovereign right to receive payment based on a percentage of the value of mineral exported.
The precious resources are taxed at varying percentages.
Earlier this year Finance minister Mthuli Ncube requested mining companies to pay up to half of their royalties in local currency marking a u-turn on a 2020 decision requiring mining companies to pay the tax only in foreign currency.
- Government wants half of royalties paid in diamonds, gold and other precious metals
- Zimbabwe doubles royalties on platinum miners
In the latest development, President Mnangagwa told thousands of Zanu PF party supporters at Uswaushava Primary school in Chiredzi North constituency on Saturday that the new plan was now operational.
Mnangagwa said this is being done to build mineral resources reserves for future generations.
“From the 1st of October, those who mine gold will pay royalties with that gold, and the royalties will be kept by the Reserve Bank of Zimbabwe (RBZ). Those who mine platinum will pay royalties by giving the government final commodity Platinum Group Metals (PGM).
“A percentage of all the eight final products will go to the reserve bank. So by the end of this year we will have loads of gold, platinum, diamonds and nickel, all the minerals…,” he said.
This comes against a background where the Treasury was concerned about lack of mineral reserves in Zimbabwe.
Last month the Treasury said the reserves serve as a source of trust in a country given that they carry no credit or counterpart risks.
Secretary for Finance George Guvamatanga then said implementation was on its way.
Zimbabwe’s mining sector is highly diversified, with close to 40 different minerals.
The predominant minerals include PGM, chrome, gold, coal, and diamonds.
Official information shows the sector accounts for about 12 % of the country’s gross domestic product (GDP), and the sector has the potential to generate US$12 billion annually by next year.