Zimbabwe makes another U-turn on mines

GOVERNMENT on Tuesday reverted to Zimbabwe dollar-denominated mining fees, only a week after Mines minister Winston Chitando made wide-ranging reviews based in United States dollars.

Chitando's move generally hiked mining fees by about 800%.

But he courted a backlash from the Zimbabwe Miners Federation (ZMF), which consists of 1,5 million artisanal miners that have emerged as the biggest contributors to gold output.

The outcry could have forced government into making a U-turn.

But the biggest threat was the possibility of seeing significant volumes of gold output being turned over to the black market, which already salts away over US$1 billion yearly.

A new statement released on Tuesday said application or the revocation of forfeiture now cost $5 000 while a non-refundable application for an exclusive prospecting order now costs $10 000.

A mining lease licence now costs $10 000 while an application for a special grant and registration for mining lease now costs $25 000.

These fees and many others had been pegged in US dollars through an order made by Chitando last week.

For instance, the application for revocation or forfeiture had been pegged at US$2 000, while mining lease application fees had been set at US$2 000, with the special mining lease denominated in hard currency.

Big mines falling under the Chamber of Mines of Zimbabwe did not comment on the fee hike.

But the ZMF immediately engaged authorities, saying most of its members would be pushed into bankruptcy if government pressed ahead with US-dollar denominated fees.

A letter sent out to affiliates by ZMF president Henrieta Rushwaya described the fees a "prohibitive".

"ZMF has noted with concern the newly gazette prices in accordance with Statutory Instrument (SI) 44 of 2021," Rushwaya said.

"We are treating the matter with utmost urgency and have started engaging the Ministry of Mines and Mining Development, the fees are too prohibitive for the majority of our miners and are likely to lead to forfeitures and forcing them into illegal mining activities."

Early this month, government reverted to a policy that limits foreign investors to a maximum of 49% shareholding in only diamond and platinum mines, after previously expanding the policy to all minerals.

It created confusion in the mining sector.

Under reforms to the Indigenisation and Economic Empowerment (IEE) Act that came into force following the dramatic 2017 coup, President Emmerson Mnangagwa's administration had freed up the rest of minerals, as it moved to attract foreign direct investment.

The bold move, which came eight years after extensive capital flight triggered by the IEE from 2010, was widely accepted worldwide as the best strategy to resolve a long-running economic crisis.

But early this month, Zimbabwe's mining industry was gripped by fresh fears of capital flight after amendments contained in the Finance (No 2) Bill empowered government to extend the scope of the sector reserved for indigenisation to all minerals.

Following days of confusion over the new moves, three ministers later issued a joint statement saying they were "deleting" the contentious clause.

"It has come to government's notice that the amendment to the Indigenisation and Economic Empowerment Act [Chapter 14:33] (IEE Act) contained in the Finance (No 2) Act, 2020 (Section 36) may have caused some misconception to some investors and other stakeholders in the mining sector," said the statement by ministers Mthuli Ncube (Finance and Economic Development), Sekesai Nzenza (Industry and Commerce) and Chitando (Mines and Mining Development).