via Zimbabwe proposes 25% mine royalties for sovereign wealth fund Mail & Guardian 13 JAN 2014 by Godfrey Marawanyika and Kevin Crowley
A Bill, which must first gain parliamentary approval before being signed into law, has proposed levies on mining companies.
Zimbabwe’s planned sovereign wealth fund will receive a quarter of mining royalties under a Bill proposed by the government, advancing a proposal first outlined in November.
The levies will be raised from companies mining gold, diamonds, coal, coal-bed methane gas, nickel, chrome, platinum “and such other mineral that may be specified”, according to a Bill dated January 10 and released publicly on Monday.
President Robert Mugabe, who extended his 33-year rule in July elections, is seeking to boost the country’s economy, which shrank by 40% between 2000 and 2008. The Bill, which proposes the Reserve Bank of Zimbabwe as the fund’s custodian, must gain parliamentary approval before being signed into law.
The sovereign wealth fund will “support fiscal or macroeconomic stabilisation of the government, including its long-term economic and social development objectives”, the Bill said. It will supplement “the revenues of Zimbabwe when these are prejudiced by fluctuations of prices” of minerals, it said.
Zimbabwe has the world’s second-largest deposits of platinum and chrome and reserves of minerals ranging from coal and iron ore to gold and diamonds. Anglo American Platinum, Impala Platinum Holdings and Rio Tinto Plc are among companies that operate in the country.
Investment has been held back by a law requiring foreign and white-owned companies to sell or cede 51% of their local assets to black Zimbabweans or the government.
Platinum miners started paying a 15% tax on unprocessed exports from January 1, in addition to a 10% royalty that’s currently levied on their revenue. The duty on diamond production is 15%. Other precious stones have a 10% royalty levied on them, while the charge for gold is 7% and that on other precious metals is 4%.
A 2% tariff is levied on base and industrial metals as well as coal-bed methane. The royalty on coal production is 1%. – Bloomberg
COMMENTS
So platinum miners are expected to now pay a 10% royalty, a 15% tax, plus a new 25% Sovereign Wealth royalty, or 50% of their sales? And this is on top of them being forced to give away 51% of the company to Mugabe? It sounds like with this new levy, they have zero incentive to invest even a penny in a new platinum smelter.
It’s another dreadful case of MUGABENOMICS! It makes no sense and never adds up to success for anyone other then Mugabe and ZANU-PF.
Sounds to me like a reallocation of the royalties being deducted already and not a fresh or additional deduction on company funds. Should this be so, it has no further effect on company revenues/profits and the article serves to be for information only.
So since the country is experiencing such boundless prosperity right now, the treasury can afford to divert 25% of our vast current income to invest in whatever Mugabe’s appointees feel is appropriate – after the requisite consultancy fees are also paid… of course!