Mining fees hike

Zimbabwe administration has hiked mining fees by between 500 and 5000 percent a move criticized by small –scale miners saying the move could drive many out of business and hinder much-needed new investment.

Application fees for prospectors license for platinum are set to be raised from $150 to $500 000 while the registration fees from $2.5-million up from the current $300.

Diamond miners prospecting fee will remain unchanged at $1-million, while a fee of $5-million will be required to register a claim.

The application fee for coal, coal-bed methane gas, mineral oils, natural gas and nuclear energy mineral resources will cost $100 000, compared to $5 000 currently.

The licence to cut and polish diamonds will rise to $100 000 from $20000 while a gold buying licence will double from $2 500 to $5 000. All fees are paid once off and non-refundable.

The new fees were gazetted under Statutory Instrument 11 of 2012.

The government insists the new charges are needed to curb speculative holding of mining claims as well as boost state coffers.

However, the Confederation of Zimbabwe Miners (CZM) which represents small-scale operators said the new charges could drive many of its members out of business and undermine the government’s empowerment policies.

“These fee increments are ridiculous and unsustainable and they will force miners out of business,” CZM president Rangana Chauke said.

Large scale operators have also warned that the levy increases could worsen the many challenges companies are already facing and threaten the viability of a sector credited with driving the country’s economic recovery.

“Over the last few years we have seen increases in royalties for precious metals, particularly gold and platinum,” Chamber of Mines president Winston Chitando said.

“If these upfront payments are allowed to continue increasing very little will be left between the unit price and the cost of production for distribution between government, communities and investors.” Several companies have also warned that they could likely take multi-million dollar hits from the new charges.

The changes come immediately after mining royalties hike.

The African Development Bank (AfDB) says Zimbabwe’s proposal to increase mining royalties in the gold and platinum sectors starting this year could lead to a heavy plunge in production and profits among companies that are currently exploiting low-grade ores.

In its latest ‘Zimbabwe Economic Monthly Review’ report, the AfDB says the upward revision of mining royalties will also discourage potential investors eyeing low-grade ores.

In his 2012 National Budget, presented late last year, Finance Minister Tendai Biti proposed increasing gold royalties from 4.5% to 7% and platinum royalties from 5% to 10%.

Zimbabwe Chamber of mines says gold miners are still operating at around 44% of their full capacity because of antiquated machinery and outdated technology, besides other setbacks.

The mining industry requires a capital injection of between $5-billion and $7-billion to attain full-capacity production.

In 2011 the mining industry grew by 25,8% and accounted for over US$2 billion in export receipts.

However, the sector which has lot of idle resources, remains key to Zimbabwe’s economic recovery process.

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