via Platinum miners wary of levy | The Herald January 8, 2014 by Golden Sibanda
GOVERNMENT will meet mining firms tomorrow amid worries among miners the proposal in the 2014 National Budget to levy raw platinum exports could sterilise ground and throw the mining companies into the red. Mining industry sources told The Herald Business the proposal in the Budget meant the effective rate of royalty for platinum miners had risen to 25 percent over and above other numerous fragmented existing mining charges.
The new levy follows intransigence by the mining companies to set up base and precious metal refinery in the country to ensure maximum benefit from extractive resources. It came into effect on the first of this month.
This is part of strong measures Government has proposed to compel platinum mining firms to beneficiate and value add to the primary resources with a total ban on raw platinum exports set to be effected next year.
The country has three active platinum miners namely Implats’ 87 percent owned unit Zimplats, Aquarius and Implats 50-50 owned joint venture Mimosa Mining Company and Anglo American subsidiary Unki Mine while a number of other platinum projects, including Todal and Ruschrome, were at different stages of development.
Former Mines and Mining Development Minister Dr Obert Mpofu gave the mining firms two years up to the end of this year to establish a refinery beyond which Government would ban the exportation of unbeneficiated platinum.
In pursuit of this goal, the Government this week invited a total of 10 local and foreign mining companies to submit expressions of interest proposals to establish base and special metal refinery in Zimbabwe to maximise returns from minerals as the deadline for exportation of raw platinum is now just short of 12 months.
Mining companies, through their representative body, the Chamber of Mines of Zimbabwe; will now meet Government tomorrow to discuss, chiefly, the proposed new platinum levy and other mining charges concerns.
Mines and Mining Development Deputy Minister Fred Moyo confirmed yesterday that a meeting was scheduled for tomorrow with the miners to discuss their concerns regarding proposed and existing policy matters.
“We have a meeting with the Chamber of Mines on Thursday. We have already had a meeting with the (small-scale) gold miners (association) to discuss such (charges) matters. We will also meet general managers and executives of the mines,” Deputy Minister Moyo said.
While he would not comment on reports of mining firms’ concerns about the potential impact of the export levy on raw platinum exports he pointed out Governmentwill listen to and act on the policy concerns.
Government has insisted on the setting up of a refinery after designating mining as the driver of economic growth in the medium term. Zimbabwe is home to the world’s second biggest known deposits of platinum and currently produces about 430 000 ounces of platinum annually.
The emphasis on a refinery to ensure beneficiation and value addition also dovetails into Government’s plans thrust espoused in its new five year economic blueprint, the Zimbabwe Agenda for Socio-Economic Transformation that will guide its programmes for the period 2014 and 2018.
Contacted for comment CoMZ chief executive Mr John Chikombero said that such kind of engagements were common between the chamber and its parent ministry to discuss issues affecting the mining industry.
“These types of engagements will always happen to discuss issues pertaining to the industry including issues that come from the budget,” he said.
But sources said platinum mining companies were worried about the impact the new levy will have on the top line and bottom line of miners who, already, are liable to a 10 percent royalty charge on gross exports.
Mining firms are liable to royalty rates that include gold (7 percent), platinum (10 percent) and diamonds (15 percent) effective since January 2012.
Other charges include Rural District Council unit tax, Environmental Management Agency discharge fees, Mineral Marketing Corporation of Zimbabwe levy, Standards Development Levy among others. The introduction of the Radiation Protection Act and the Engineering Council of Zimbabwe Act added to these costs incurred by mining firms.
‘It (export levy) has serious potential of resource sterilization because miners have to raise their cut-off grade since they cannot sustain mining on low grades and that is assuming that they can remain profitable.
“And in a context where mineral prices are fluctuating as is happening with platinum, it means this could put companies in potential loss making position and make the ability to expand operations difficult,” the source said.
For a long time now mining companies have complained about the level and number of many numerous and fragmented charges and levies they say increase the cost of mining and ground that can be viably worked.