Payment of statutory obligations in forex worries miners

Local mining companies have raised concern over payment of statutory obligations in foreign currency, arguing this was putting pressure on the current forex retention level now inadequate to meet their operational requirements.

According to the state of the mining industry survey commissioned by the Chamber of Mines of Zimbabwe, the miners said they were hoping the Government would allow mining companies to retain 100 percent of their export earnings to enable them meet their statutory obligations in foreign currency.

Local exporters are allowed to retain 70 percent of their earnings while the remainder is liquidated at the prevailing exchange rate.

The statutory payments by the miners include royalties, taxes and rural district council (RDC) charges and Environmental Management Agency levies.

Diamond producers indicated that the royalty for diamond at 10 percent is still one of the highest in the world and is undermining viability of diamond producers.

They are expecting Government to review the royalty downwards in line with global best practice.

Almost all respondents surveyed indicated that Rural District Councils fees are too high, unaffordable and vary with district.

“As was the case in 2019, all respondents expressed concern over the way RDCs determine unit taxes (based on RDC budgetary requirements),” read part of the report.

“Respondents also indicated that RDCs are invoicing mining companies in forex. In 2021 most respondents are looking forward to Government intervention in unifying the charges for RDCs.

“All respondents are also expecting Government to allow mining companies to pay for RDC charges in line with obtaining retention framework.”

On the environmental charges, almost all respondents indicated that the Environmental Impact Assessment fee at 1,2 percent of project cost with a cap of US$2 million is prohibitive for new projects and discourage investment into the mining sector.

Almost all respondents confirmed that the Government had removed the compulsory liquidation of unused nostro balances to support mining companies to recover from the adverse impact of the Covid-19 pandemic. They, however, expressed concern on the reinstatement of the time limit to 60 days arguing that it is not in line with production cycles in the mining sector and that the Covid-19 situation has not entirely improved.

Survey findings show that about 40 percent of respondents are looking forward to the removal of the compulsory liquidation time limit, while another 60 percent are expecting the authorities to align the liquidation time limit to production.-herald.cl.zw