Online Reporter
DEMAND is continually rising for the six platinum group metals as the electronics industry, the largest user, continues its expansion and the chemical industries, which rely on the metals as catalysts in many reactions including cleaning out pollutants, grow ever more complex.
The mining is very concentrated, with most of the global production coming from just three countries.
South Africa is dominant in first place with around 120 tonnes a year, followed by Russia with around 23 tonnes and Zimbabwe on a little over 16 tonnes.
The rest of the world combined, with Canada leading the pack on 5,5 tonnes, total around 13 tonnes, less than Zimbabwe’s production.
Now Zimbabwe will be moving very definitely into second place with a little over another seven tonnes a year, in just the first phases, coming from a new mine south-east of Chegutu on the Great Dyke following the signing of a special mining lease this week with Karo Platinum, part of Tharisa plc, which owns a large mine in South Africa and is pushing north.
Tharisa and Karo have already pumped about US$240 million into Zimbabwe to set up plant, bring in the mining fleets needed for open-cast mining, set up the water and power infrastructure and start building the community that a 1 000-employee operation will require.
Such a commitment definitely proved that Karo were not some speculative fly-by-night operation, but a really serious investor wanting to a make a long-term commitment to open and operate a large mine in Zimbabwe.
So the Government responded extremely positively.
The core of the response is a 25-year special mining lease over 23 904ha of ore reserves.
That gives Karo and its investors the security needed to spend a lot more money on getting the mine established and operating, a large up-front cost before the money from sales starts flowing in.
A decent lease, that will cover the area holding the reserves for the lifespan of a mine, and valid for a respectable number of years assures the investors, whether local or foreign, that so long as they mine efficiently and properly they will get their investment back with an additional reasonable return.
The Second Republic has proved itself willing to look at lease extensions for older leases for mining companies that are operating well and if Karo is still pushing ahead in 25 years, it is likely to join that group.
There are the normal tax breaks for large mining investment, basically allowing the investment costs to be written off over a number of years and presumably allowing equipment in duty free. These are hardly new, although now are set out far more clearly.
The one tax that Karo pays from the first shovel off ore will be the royalties, at the moment 7 percent for platinum group metals, and Zimbabweans were assured at the lease signing ceremony this week witnessed by President Mnangagwa, that while a series of temporary concessions can be made on other taxes, the royalties have to be paid.
This again is the modern global standard where the State owns the mineral rights, as it does in Zimbabwe, and avoids the huge tax disputes that bedevilled mining a few decades ago.
Now a large swathe of countries from Australia to Zimbabwe simply reckon the royalty is the main tax and everyone recognises that disputes are almost impossible.
Zimbabwe keeps the royalties fairly low, recognising that the miners need to be viable if they are going to invest, but still getting more in most cases than was collected in pre-royalty days.
Half the royalties are automatically added to the Reserve Bank of Zimbabwe reserves while the rest increase the Government’s ability to develop the country.
Besides the investment, taxation and the lease arrangements, miners are expected to follow labour and environmental laws, but the labour side minimums are set in an industry-wide collective bargaining agreement, with most large companies doing better.
Environmental laws largely centre on preventing toxic pollution, stabilising mine dumps, usually by allowing them to revert to wooded wilderness, and where possible restoring landscapes by, for example, cut and fill digging in open cast mines. With Zimbabwe moving into a definite second place globally for platinum group metals, a major local refinery becomes ever more viable, especially if it was a joint venture between the competing miners.
The Karo investment is a good deal for Zimbabwe raising production of platinum group metals 40 percent, adding another 1 000 decent jobs, increasing exports and adding to currency reserves.
