New tax for miners amid belt tightening

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MINES are to be taxed a new levy to fund exploration activities as the government transforms the Minerals Marketing Corporation of Zimbabwe into a state exploration company.
This comes in the wake of declining exploratory work by mining firms at a time when the industry globally is facing market uncertainties.
Anglo American Platinum has already announced that it is cutting expenditure and delaying capital to 2017.
Bruce Williamson, the Imara Africa Resource Fund manager said on Wednesday that miners were facing risks and uncertainties globally although “there is still a fair amount of stock PGM [Platinum Group Metals] around”.
He said Zimbabwe-focused miners such as Aquarius Platinum were likely to focus on cost containment and avoiding losses.
“The coming months will remain exceptionally challenging for both Kroondal and Mimosa. At both operations, management’s focus will be to prevent losses.
“So cost cutting will be the name of the game; hopefully retrenchments can be avoided,” said Williamson.
Zimbabwe has vast mineral wealth spanning diamonds, platinum, gold, nickel, chrome and coal among other natural resources.
It has attracted other mining investors such as Impala Platinum and Caledonia Mining Corporation among others.
However, the country has failed to transform its mineral riches into wealth for its 13 million citizens amid an outcry that officials are pillaging proceeds from state firms involved in diamond mining.
Mines and Mining Development Minister, Walter Chidakwa, has said in an interview that the government is spearheading the setting up of a state exploration company which will be funded by contributions from miners.
He also said that this would be attained through transformation of the MMCZ.
“What we are saying is that we want to transform the MMCZ into an exploration company,” said the minister.
“There is no new levy for exploration but the small fee that companies were paying to the MMCZ will be increased to about 1% so that the money can be used to fund exploration activities.”
Mining industry sources say the operating framework in Zimbabwe is prohibitive of further exploration for current mining projects.
They said the government needs to restore certainty in the industry to allow investors to commit funds and expand operations.Advertisement

“Expansion of operations is undertaken through exploration but sadly, as of now, there is very little exploration taking place because the environment is uncertain and investors are sticking to current projects,” said an official from the chamber of mines of Zimbabwe.