Fees threaten mining

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The Geological Society of Zimbabwe (GSZ) has expressed concern at the negative impact of the recent increase in various mining fees by the ministry of Mines and Mining Development.

In a letter to the Mines ministry permanent secretary Prince Mupazviriho last week, GSZ chairman Houda Bouammar said the new fees represented a major disincentive to any credible investment.

According to Statutory Instrument 11 of 2012, registration of diamond claims increased from $1 million to $5 million with a new ground rental fee of $3 000 per hectare per year.

Application fees for prospective coal investors rose to
$100 000 from $5 000 and registration fees for platinum were increased to $2,5 million.

The new fees are seen by the Geological Society as a serious threat to the mining industry of the country, Bouammar said.

The unrealistic barriers these fees create discourage entry to all scales of energetic, credible and serious investors.

By charging such high rates, even the most serious of investors will use it and lose it.

Rather than attempting to manage the chaotic state of the current mineral rights system through fees, it would be more effective and beneficial to both the government and the industry to urgently modernise the cadastral system in line with international best practices so investor confidence is regained and maintained for successful mineral resources developments in the country.

The Zimbabwe Chamber of Mines on Tuesday told Parliament the new mining fees and the upward review of gold and platinum royalties would hurt the mining sector.

Bouammar said there was need for all professional parties in the mining industry to be consulted in the process of efficiently adjusting the title rights fees.

He said while GSZ understood the new fees were for the benefit of the country and to discourage the holding of mining claims for speculative purposes, they were largely unrealistic and would not only fail to achieve these objectives, but would certainly discourage credible investors.

GSZ said the fees for users should not exceed the levels that allow successful legal administration of the Act, adding the fees for non-users must be structured so that holding ground becomes worthwhile only if there are credible plans for resources to be explored or mined.

Bouammar said the high degree of risk, especially at the outset and intellectual nature in the form of models, relevant technologies and business vision of the mineral exploration and evaluation must be considered in the allocation of mining claims.

For this reason, if a vibrant industry is to be encouraged, the barriers to entry should be as low as possible and competitive on a regional and international level, he said.

Rather than high fees to distinguish between players, the use of a system of work plans and capacity demonstration like those applicable to exclusive prospective order should be encouraged.

He said the scale of the new prospecting and registration fees represents an insurmountable barrier to entry for all scales of operators, adding fees should be affordable by both small-scale miners as well as multinationals.

There has been an uproar ever since the new mining fees were gazetted last month with small-scale miners arguing they could not afford them.