Zimbabwe cuts mining start-up fees

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Published Mar 25, 2014

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Harare - New reduced mining fees gazetted by Zimbabwe had to be backed by other significant improvements in the operating framework, experts told Business Report yesterday as the Harare government strengthens its drive to woo international investors to the country.

South African mining companies, which have been attracted to the country by its mineral and metals allure and glitter, said yesterday that the changes in the fee regime pointed to the willingness of the government to improve the environment and make it competitive.

Mining investors have long been unnerved by the policy framework in Zimbabwe, which worsened in 2012 when the government asked foreign owned mining companies to give up 51 percent control under the indigenisation policy.

Aquarius Platinum spokeswoman Charmane Russell said that “efforts to improve the competitiveness of the mining industry” were a welcome development. However, she said that the new mining fee structures would be applicable and most favourable for new mining investors.

“This has been in line with Aquarius’s experience that the government of Zimbabwe is making significant progress in creating an enabling mining environment. However, the changes cited above affect newcomers to the country, rather than existing producers.”

The latest Government Gazette published on Friday says platinum prospecting licences have been slashed from $500 000 (R5.4 million) to $500. The government has also reduced registration fees for special platinum blocks from $2.5m to $750 000.

Fees for diamonds remained the same at $1m for application and renewal fees, although the government has scrapped the $5m registration fee.

One of the leading diamond mines in Zimbabwe, Mbada Diamonds, which is owned by the state in partnership with Chinese investors, said last week that it had raked in $1 billion in revenue since starting operations four years ago.

And for its confirmed coal and coal-bed methane gas resources, the country has cut application fees by as much as 90 percent to $10 000. Registration fees for the two energy sources have been lowered from $500 000 to $100 000.

A senior executive at the Chamber of Mines of Zimbabwe, whose chief executive officer John Chikombero resigned last week to pursue personal interests, said the miners’ representative grouping had intensified its lobbying for the government to lower royalties that the industry deems high.

The slashing of registration, application and prospecting fees comes in the wake of intense lobbying by mining companies that have complained of rising costs stemming from increased demands for more revenue contributions to the state.

Ted Muzoroza, a mining law and policy expert based in Harare, said that the reduced mining fees were welcome but cautioned that they needed to be backed by other significant improvements in the operating and policy framework.

A friendly mining environment would help Zimbabwe – which has the world’s largest platinum deposits after South Africa – attract new investments in its mining sector, other experts said.

“It’s a welcome development because high fees have been a major worry for mining companies. But, again, it has to be backed by other improvements in the operating framework such as the royalties, which are still high,” Muzoroza said.

Zimbabwe is also endowed with other mineral riches, such as confirmed ore reserves of gold, chrome, coal, nickel and diamonds.

There has also been renewed pressure on the platinum mining companies in Zimbabwe to build a refinery inside the country. Mines and Mining Development Minister Walter Chidakwa told Business Report yesterday that he was looking into the finer details of proposals by two shortlisted companies keen to build a base metals refinery.

Impala Platinum is seen as a front-runner in the bid to set up a platinum refinery inside the country.

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