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ZIMBABWE is considering a review of mineral royalties to help the country’s miners, a cabinet minister has said, as the country looks to attract billions in investment to capitalise on its abundant natural resources. Any change in royalties would have to strike a balance between promoting mining growth through lower royalty fees and the need to have the sector contribute more to state coffers, Mines and Mining Development Minister Walter Chidhakwa said in an interview at the weekend.
The country’s Chamber of Mines in a recent report said Zimbabwe needed investment of as much as $5,3 billion and stable mining policies if it wanted to boost its platinum output to vie with Russia as the second-biggest producer — after South Africa — of the precious metal.
It’s evident from 2017 onward Zimbabwe’s production of platinum will be approaching that of Russia, the chamber said. This growth projection, however, requires significant investment.
Zimbabwe’s mining companies — which include Johannesburg Stock Exchange-listed Anglo American Platinum, Impala Platinum (Implats) and Aquarius Platinum — are forecast to produce a combined 365 000 ounces of platinum this year.
Any cut in Zimbabwe’s royalties will inevitably invite contrasts with South Africa, where higher royalties, or a resource rent tax, have been mooted by the African National Congress.
Experts say a review of mineral royalties in Zimbabwe should facilitate further investment into mining productivity. Zimbabwe levies 10 percent and 7 percent as royalty fees for platinum and gold, respectively. The chamber said in the report that the high mineral royalties that took effect at the beginning of this year had resulted in a significant shift in production costs. Miners in Zimbabwe also paid separate fees to local authorities, the Environmental Management Agency and to the minerals marketing body.
During a visit to Mimosa Mine on Saturday, Mr Chidhakwa said that the Government was looking into a possible review of mineral royalties. Mimosa is a platinum project jointly owned by Implats and Aquarius Platinum.
“We are talking about the royalties,” Mr Chidhakwa said. “You must understand it’s a matter that should be resolved through the (2014 national) budget.”
He said the government had not received representations from the Chamber of Mines on the need to lower mineral royalties.
The chamber needed to come up with a position on the various minerals its members were extracting in Zimbabwe.
“We are yet to get representations from the Chamber of Mines,” Mr Chidhakwa said.
Mr Winston Chitando, executive chairman of Mimosa, said on Saturday in Zvishavane, where the mine is situated, that he was happy with the progress in the negotiations with the government on issues affecting the operation regarding the country’s indigenisation law.
There are discussions taking place.
He said Mimosa was undertaking a feasibility study on sinking a second shaft at the mine. But he would not reveal the expected date for the commencement of work on the shaft.
Possible sinking of a new shaft was work in progress and various options were being explored based on updates coming from experts working on the project.
Mimosa’s revenue for the quarter to September declined to $33,5 million, compared with the corresponding period last year when it came in at $39,5 million. The drop came after the miner incurred a $5,3 million negative sales adjustment. – Businessday
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