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New fees to boost productivity

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The recently gazetted mining fees will remain in place as they are meant to encourage productive use of claims and attract meaningful investment into the mining sector, in particular from small-scale miners.

Mines and Mining Development permanent secretary Prince Mupazviriho yesterday said the new fees would ensure serious miners would conduct operations.

A number of small-scale miners have cried foul, arguing the hiking of fees would push them out of business.

Mupazviriho said the government was in the process of consulting other ministries with regards to hiking of royalty fees.

He said the ministry will continue with the use-it-or-lose-it model to ensure people made use of claims they own.

People should attract investment and contribute to the economy, said Mupazviriho. Currently small-scale miners, especially in the gold sector, are contributing (through alluvial gold), it is one of the easiest way of mining, but that is not (commercial) mining.

We still want to see if there is growth and employment creation in that sector.

As part of capacitating small-scale miners, Mupazviriho said the ministry was distributing compressors and mining equipment to assist them in their operations.

According to the Statutory Instrument 11 of 2012, published last month, application fees for a coal miner will increase to $100 000 from $5 000 while the registration fees will be $500 000.

Registration of diamond claims rose to $5 million from $1 million while the ground rental fee is now $3 000 per hectare per year.

Platinum claim application fees for ordinary and special prospectors are now at $500 000 from $200.

In the second quarter trading update, platinum mining firm Mimosa said the upward of review of fees was not good for the sector.

If implemented as reported, these revised fees could result in an increase of 50 000% compared to the current fee regime and will have a huge impact on all mining companies, said Mimosa.

Mimosa might be faced with an additional multi-million-dollar charge. Discussions are currently being conducted through the Chamber of Mines with a view to achieve reduced and sustainable mining fees.

With regards to royalties Mupazviriho said: We are looking into that in conjunction with other ministries.
The government increased royalty fees on gold increasing them to 7% from 4,5% while those of platinum would be doubled to 10%.

Last week the National Miners Association of Zimbabwe, a representative body of small-scale miners in the country, said increase in the mining fees would destroy small-scale miners and promote illegal mining activities.

Meanwhile the Chamber of Mines of Zimbabwe (CMZ) said the mining sector growth this year was largely dependent on the availability of capital and power.

CMZ president Winston Chitando said the sector contributed at least 13% of the total gross domestic product in 2011 although actual figures on output will be released by the end of this month.

The sector is expected to grow by 16% this year after it grew by 25,8% last year.

The 2012 growth, however, is largely dependent on availability of capital and power. Apart from capital and power, a number of factors will determine the growth including, but not limited to changes in international commodity prices and policy interventions, Chitando said.

He said subject to receipt and analysis of December 2011 returns, the sector exports earned were around $2,2 billion, about 50% of national exports.

The mining sector could not access the required capital in 2011. The availability of capital in 2012 will largely depend on how much the financial sector will be able to mobilise as well as on mining sector policy interventions, he said.

It is estimated the mining sector requires $6 billion for recapitalisation of the industry in the next five years.

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