Chamber calls for review of mining royalties

are collected from the country’s mining firms.
According to the Chamber of Mines a considerable part of the country’s mining royalties are absorbed into the fiscus and are utilised for consumptive purposes.
Chamber of Mines president Mr Victor Gapare said royalties should have the long-term effect of compensating the loss of the country’s mineral resources.
“Royalties are presently going into consumption, which is dysfunctional. In other countries royalties go into a sovereign fund for the establishment of industries to sustain the economy when minerals have been exhausted.
“There is need for a review of our system,” said Mr Gapare.
Ideally, mining royalties should ensure community development where the particular mining operation in based.
The accelerated growth in the use of mining royalties resources to finance municipal investment presents an opportunity for critical infrastructure development in areas that typically receive lesser project funding in comparison to the larger cities and towns.
Official data shows that as at the close of September, the Government received US$20,7 million in revenues from mineral sales of US$594 million (excluding diamonds).
Recently, the Chamber of Mines revealed that the country’s mineral exports (excluding diamonds) more than doubled to US$1,3 billion last year driven by favourable commodity prices and improved output by the mining companies.
There have been calls from some spheres for the Government to utilise mining revenues, especially from the diamonds sector, in boosting its coffers.
The utilisation of royalties can differ between countries, although ultimately benefiting the society.
In some countries royalties from mining companies are used directly to develop the operating companies’ surrounding community.
In Peru, for example, 50 percent of income taxes paid by mining companies to the national government be channelled back to regional (25 percent) and municipal (75 percent) governments under the denomination of mining royalties.
In South Africa, Impala Platinum Holdings’ Rustenburg mine pays royalties directly to the Bafokeng community; the funds are then used for community development projects.
Another variant that can be seen locally is the arrangement between the diamond mining firms in Chiadzwa and the Marange communal area to receive royalties, which will eventually be turned into community shareholding in the companies.
Some observers have however lamented the limited revenues that the Government has been receiving from mining companies relative to improved mineral output, especially last year.