Mining companies under-declaring earnings: Govt 

Source: Mining companies under-declaring earnings: Govt –Newsday Zimbabwe

Mthuli Ncube

FINANCE Minister Mthuli Ncube says government made the decision to demand royalties from mining companies in the form of minerals because it suspected that they were under-declaring earnings and fuelling illicit financial flows in the sector.

In October, government said mining firms would pay half of their royalties in minerals to government.

While explaining the regulations to legislators in the National Assembly last Friday, Ncube said the new directives would be effective in curbing unlawful mining activities.

 “Basically we want to make sure that we maximise on the royalties that we are collecting and that companies do not under-declare, under-invoice and so forth. We want to make sure that we are in possession of the hard minerals ourselves and be able to get the full price from the market because we believe that there are some illicit activities,” Ncube said.

“When you have got the physical metal in your vaults, it gives you one advantage — to realise cash out of that metal.  You do not have to sell it; all you need to do is to securitise it so that you issue some certificate on the back of that gold in your vaults and then you discount those securities and that piece of paper in the market and receive the cash.  It is as if you borrowed from the market on the back of the physical gold, but you do that without selling the gold, and that is the advantage it gives you.

“The physical metal has an advantage because ordinarily if you have the cash, you just spend the cash.  So, we believe that this will go further in supporting us to raise additional resources from our royalties,” he said.

The main minerals found in Zimbabwe include gold, platinum, chrome, coal, diamonds and lithium.