Business / Economy
Foreign miners in Zimbabwe to be hit by higher royalty payments
16 Jul 2011 at 15:45hrs | Views
GOVERNMENT will be adjusting royalties that are paid by foreign mining houses upwards in the five years through 2015 in order to augment revenue flows to the Treasury.
According to the Medium Term Plan (MTP) the adjustments will be aligned to the performance of the sectors.
On the overall, Government forecasts that growth in the mining sector will rise to 44 percent this year but ease to 20 percent in 2012.
However, growth is expected to moderate to 18,3 percent, 19,4 percent and 8 percent in 2013, 2014 and 2015 respectively.
Though the rates of increases in royalties are not spelt out in the MTP, a zero draft that was crafted earlier on by the authorities shows that it is proposed that the royalties for coal miners be reviewed from 1 percent to 5 percent for foreign-owned mining firms, 2 percent for joint venture companies and 1 percent for local companies.
Tariffs for base metals were also expected to climb from 2 percent to 10 percent for foreign mining houses, with joint venture companies and local firms being levied at 6 percent and 3 percent correspondingly. Similar increases were also proposed for precious metals.
However, tariffs for precious stones were projected to rise from the current 10 percent to 12 percent for foreign miners, 7,5 percent for joint ventures and 5 percent for local companies.
It is expected that the funds that will be raised will be pooled into a sovereign wealth fund that will subsequently be used to sponsor "development of all provinces of Zimbabwe and all communities where the mining operations will be taking place".
Local policymakers contend that royalties, which are meant to enable countries to get a direct and fair share from exploitation of mineral resources, must take into account the level of local ownership and local beneficiation initiatives.
Under the current indigenisation and empowerment legislation, mining companies are expected to submit their proposals for indigenisation to the authorities before the end of the year.
According to the Medium Term Plan (MTP) the adjustments will be aligned to the performance of the sectors.
On the overall, Government forecasts that growth in the mining sector will rise to 44 percent this year but ease to 20 percent in 2012.
However, growth is expected to moderate to 18,3 percent, 19,4 percent and 8 percent in 2013, 2014 and 2015 respectively.
Though the rates of increases in royalties are not spelt out in the MTP, a zero draft that was crafted earlier on by the authorities shows that it is proposed that the royalties for coal miners be reviewed from 1 percent to 5 percent for foreign-owned mining firms, 2 percent for joint venture companies and 1 percent for local companies.
However, tariffs for precious stones were projected to rise from the current 10 percent to 12 percent for foreign miners, 7,5 percent for joint ventures and 5 percent for local companies.
It is expected that the funds that will be raised will be pooled into a sovereign wealth fund that will subsequently be used to sponsor "development of all provinces of Zimbabwe and all communities where the mining operations will be taking place".
Local policymakers contend that royalties, which are meant to enable countries to get a direct and fair share from exploitation of mineral resources, must take into account the level of local ownership and local beneficiation initiatives.
Under the current indigenisation and empowerment legislation, mining companies are expected to submit their proposals for indigenisation to the authorities before the end of the year.
Source - MTP
