HARARE – Zimbabwe plans to introduce a new mining tax regime targeted at plugging mineral and revenue leakages as well as attract investors into the extractive sector.
Also, Finance minister Patrick Chinamasa said the move was aimed at striking a balance between revenue inflows from the mining industry, and its viability.
This is on the back of Zimbabwe hinging its economic growth hopes on the mining sector, but it has been weighed down by falling global commodity prices.
“The mining fiscal model will enable government to design an appropriate tax system that attracts investment into the mining sector and promotes optimal mineral extraction and revenue generation, without sterilising minerals, that is, extraction of high grade ores, at the expense of less economic grades,” the Treasury chief said in his 2015 National Budget.
He noted that the long-term sustainability of the mining sector required government to put in place a mechanism to assess the economic impact of various policy decisions.
“The model would be used as an audit tool to assess mineral and revenue leakages and also project future revenues from the mining sector,” he said.
Under the proposed system, mining houses will be compelled to provide data to tax collector Zimbabwe Revenue Authority (Zimra) such as exploration costs, pre and post-operative costs, debt-equity mix and repayment terms in a prescribed format.
“The effectiveness of the mine fiscal model is dependent on the availability of quality data from the mining sector.
“The availability of data will ensure transparency of the mining operations,” he said.
Chinamasa has projected a moderate growth of 3,1 percent next year for overall mineral output, being driven by nickel, gold, chrome and coal.
This comes as the re-enactment of a new Mines and Minerals Act has been stalled as the draft document is currently at the Attorney-General’s office for consideration.
In September, Mines minister Walter Chidakwa said the draft policy would be sent to Parliament for ratification and implementation after complete scrutiny by the AG’s office.
“Our problem is that at this very moment we have about 200 odd pieces of legislation at the Attorney-General’s office, all intending to comply with the new Constitution.
“They can only do so much in a day. I know the Justice ministry is working on mechanisms to speed up the processes,” said Chidakwa.
Among the key issues to be incorporated in the policy are minerals governance, regulatory framework, equitable and competitive fiscal regime, minerals marketing, competing land rights and use options.
Chidakwa said escalating production costs, limited access to long-term capital and depressed global metal prices continue to threaten the mining industry’s viability.
“There is nothing much you can do about international mineral prices.
“The projection of more than 10 percent was predicated on a higher upward trend of nickel prices,” he said.
He noted that although nickel production had significantly grown, the growth had not met expectations.
“The hope was that the good price would trigger more production. The natural affinity of miners is that when prices are favourable, they would ramp up production,” said Chidakwa adding that he still hoped production would increase before end of year.
Source: Daily News