(Last Updated on August 10, 2012 by Editor)
THE recent increase in mining fees and the implications of the indigenisation policy will come under the spotlight at next week’s Chamber of Mines annual general meeting in Victoria Falls.
Mining analysts said the mining fees hike — by as much as 8 000 percent — and the indigenisation and empowerment laws were squeezing the flow of investment into the sector.
The new laws require foreign companies to have a majority stake in indigenous hands.
“I think we need to look at bigger projects, Zimplats (and) Mimosa Mines,” a mining expert, Dr Chris Hokonya, said last week.
“If you look at their big plans five years ago, by now Zimplats would have put in US$2 billion for expansion, Mimosa would have put in another US$500 million for expansion and New Dawn would have put in between US$200 and US$300 million for expansion.
“There may be a delay because of indigenisation.”
Dr Hokonya is a mining consultant and former Chamber of Mines chief executive.
The sector, which contracted by more than 30 percent between 2000 and 2008 due to the economic crisis, is expected to grow by 15,3 percent this year, according to Finance Ministry projections.
The Chamber of Mines says the mining sector requires between US$3 billion and US$4 billion in new investment to expand capacity.
Mr Sternford Moyo, a senior partner at Scanlen & Holderness, the Zimbabwean Lex Africa member law firm, recently said it would be difficult to raise such capital in light of high mining taxes and levies.
“The fee levels are clearly unaffordable in an environment characterised by liquidity challenges,” he said. “Investor friendly policies are urgently needed, as without external investment, there is no prospect of us being able to raise capital for the mining sector and benefit from our minerals to drive economic growth.”
Registration charges for platinum and diamond claims rose to US$2,5 million and US$5 million, respectively, in a move Government says was meant to curb the speculative holding of mineral claims.
Claim holders are required to pay annual ground rentals ranging from US$500 per hectare for chrome and US$3 000 per hectare for diamonds.
The Chamber of Mines told a Parliamentary Committee on Mines and Energy in February that the increase in royalties of 7,5 percent for gold and 10 percent for platinum announced in the 2012 would hit mining firms, yet to fully recover from an economic crisis.
“It’s estimated that 60 percent of every dollar earned in revenue goes to the Government, making Zimbabwe one of the most expensive countries to mine,” the chamber’s vice president, Mr Allan Mashingaidze, said then.
Mining has been the major driving force behind economic growth, benefiting from private capital injection and firming commodity prices.
Last year, the industry benefited from lines of credit in support of investments to the tune of US$502 million, a report by Invictus Securities said.
Dr Hokonya said the country could have lost three years of productivity translating to several billions of dollars worth of investment as investors waited for clarity on the indigenisation policy.
“Investors cannot keep on throwing their money just because we have mineral deposits.” The conference would be held under the theme “Powering the Mining Industry for Growth and Development”.
Speakers lined up for the event include Mines and Mining Development Minister Obet Mpofu, Chamber of Mines president and Mimosa chief executive Mr Winston Chitando and tax expert Mr Tawanda