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Only one factor can remain constant: How can Zimbabwe derive maximum benefit from non-renewable resources.
And even then this “benefit” is composed of a number of sub-benefits. These include tax revenues, decent jobs, infrastructure development, economic development especially through downstream industries, growth of Zimbabwe’s capital base (which brings in the empowerment part into modern calculations of benefit), benefits to the surrounding communities, growth of skills and transfers of technology.
All these benefits need to be weighted and given priorities.
At the same time those examining how benefits can be brought into law need to recognise that Zimbabwe does not exist in a perfect world.
A small country with a lot of minerals is not going to absorb the bulk of production. Export markets and global pricing will have a major effect on what is economically possible.
In fact coal and phosphate mining are the sole mining activities where local demand is paramount. For everything else global markets define prices and interest by external investors.
So making mining law requires some very clear thinking, as Deputy Prime Minister Arthur Mutambara noted last week at the annual congress of the Zimbabwe National Chamber of Commerce.
And, as he noted, mining law in the colonial era gave priority to some benefits but not to others.
In the 1890s the mineral rights were owned (after being stolen) by the British South Africa Company.
That organisation simply wanted maximum revenue in the short term for its shareholders. It tried several expedients; including demanding 50 percent of all shares in mining companies, payment of royalties and mining profit taxes.
By neglecting everything else it never made much money and was glad to sell out to the settler government in the early 1930s.
That colonial authority had a slightly wider list of desired benefits, but was facing a global depression and then a World War.
So it concentrated on employment of settlers and some taxation, but dumped royalties, local ownership rules and general economic benefits, while at the same time creating rules that gave external investors almost total control.
The brief period of economic recovery after the Second World War was followed by UDI and a return to the exceptional circumstances where white employment and modest taxes were paramount, again short-term goals.
Some efforts were made after independence to reform mining law, but these were made during a time when growth in global demand was slackening, so too much of the old law arising from half a century of exceptional circumstances was retained.
DPM Mutambara highlighted this and his criticism of a lack of creative thinking is valid.
At the same time many external investors had developed techniques of transfer pricing that let them pay almost zero taxes in producing countries and move their profits to tax-free jurisdictions, a problem all producing countries faced as even their own investors moved head offices offshore.
Bringing back royalties helped a little, but this only restored some taxation losses without addressing other fundamentals.
Even in a highly competitive global marketplace, Zimbabwe can do a lot better.
The ad hoc changes resulting from new indigenisation laws create legal dichotomies that need to be sorted out, so there is some urgency in having a full review of mining law.
This must start from scratch, listing desired benefits and ordering these in importance.
For a start it is clear that growing Zimbabwe’s capital base, which is what empowerment gives, and community benefits are already a lot higher priorities than the present law assumes.
While short-term benefits, jobs and taxes are important, there is a lot more on the list that will ensure that Zimbabwe can earn money from mining even in future bad times.
The review needs more input than that traditionally given by mining experts and mining engineers, although their contribution must be given a lot of weight.
But other experts must now join them and political decisions are needed when balancing any conflicting demands.
In fact the actual ordering of priorities is a national process, not a sector process, and so must have multiple inputs.
We think that technical, financial and political factors can be reconciled to produce something a lot better, and a lot more flexible, than what we now have.
We hope the review starts soon.
Online Reporter