‘Zim should optimise mining fiscal regime’

The Southern Africa Resource Watch (SARW) says Zimbabwe needs a fiscal regime that enables both the investors and the country to benefit more from its rich mineral resources, at a time the Government is angling for a US$12 billion revenue mining sector by 2030.

The mining sector is one of the key economic sectors expected to transform Zimbabwe into an upper middle income economy by 2030. Already, the Government has a strategy in place to help mining to a US$12 billion revenue sector by 2023.

A fiscal regime encompasses several elements ranging from royalties, bonus payments, annual rentals, income taxes, value added or goods and services and import and export duties.

But SARW is of the view that lack of investment towards exploration, gaps in the fiscal regime, “limited” tax incentives and policy issues are some of the factors that could hinder the country from deriving maximum benefits from its minerals, especially platinum.

SARW executive director Dr Claude Kaberuka said the current fiscal regime benefitted companies more than the general economy creating scope for the Government to strike a balance and ensure the economy benefits.

He said the country needed to focus on all the key aspects in mining from exploration, to royalties, taxes, imports and exports and come up with mining policies that benefit all stakeholders equitably. Currently, most policy makers in African countries are focused on royalties, according to the SARW.

“Currently we don’t think Zimbabwe is getting enough from its minerals, there is a need to strike a balance between the country’s interest and mining company, but as it is it seems the interest is leaning more towards the companies,” he said in an interview.

“There are bigger companies and investors out there that could be coming into Zimbabwe apart from the already existing ones, but we are not seeing much of that . . . We need to build predictability in order to attract new investors, because investors do not want uncertainties.

“We know that Zimbabwe has a plan to raise US$12 billion from the mining sector, but you need a good fiscal regime that creates a space to collect that money,” said Dr Kaberuka. But recently, Implats, one of the big investors in the country’s platinum industry and parent company for Zimplats said recently that Zimbabwe had a conducive environment for investment.

South Africa’s Impala Platinum Holdings (Implats) described Zimbabwe as the best investment jurisdiction due to its predictable and supportive operating environment which has allowed its investments to thrive without disruption.

Implats chief executive, Nico Muller, speaking at the Johannesburg Mining Indaba, said while others saw Zimbabwe as risky, the group continued to expand its operations.

“Zimbabwe is the best jurisdiction to operate in; predictable operating environment, least disruption, best safety record, I’m happy that others see Zimbabwe as a risk. It allows us to continue expanding our interest there,” he said.

However, Dr Kaberuka said it was imperative to ensure the environment allows all parties to benefit, with the mining activities meaningfully contributing towards the economy, employment and community development.

He said a conducive environment was one that is “transparent, a fiscal regime that allows investors to know what to expect from their investment and where they do not take everything from the state.

“So when a mining company says it’s a conducive environment, we must ask ourselves what they mean by that, is everyone benefitting?”

He however, highlighted the challenge was not only in Zimbabwe but prevalent across the region with tax exemptions granted to mining companies at the expense of the regional economies.

“Zimbabwe is not alone in this, it’s a problem for most African countries that are not benefitting enough from their resources. Platinum is a critical mineral and Zimbabwe has a good grade, so why give exemptions for a mineral which is needed so much,” he querried.

Resource rich developing countries like Zimbabwe want to develop a fiscal regime that strikes a balance between securing a fair return on making the resources available to investors as well as being able to attract those investors.-The Herald