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Minerals exploration Bill to be tabled in Parliament

Columnists
The Minerals Exploration and Marketing Corporation Bill, HB 11 of 2015 has been gazetted, paving the way for its introduction in Parliament. A Bill is automatically referred to the relevant portfolio committee of Parliament upon gazetting.

The Minerals Exploration and Marketing Corporation Bill, HB 11 of 2015 has been gazetted, paving the way for its introduction in Parliament. A Bill is automatically referred to the relevant portfolio committee of Parliament upon gazetting.

The appropriate portfolio committee in this case is the one on Mines and Energy, chaired by Zanu PF chief whip, Lovemore Matuke.

It is a constitutional requirement (section 141) that Parliament consult interested parties before passing any piece of legislation. It is, therefore, possible that the Mines and Energy Portfolio Committee will conduct public hearings on the Bill before compiling its report for tabling in the House for debate. Interested parties must, therefore, thoroughly scrutinise the proposed provisions and constructively engage the portfolio committee in order for Parliament to pass mining legislation that satisfies the minimum requirements of a good law.

The Minerals Exploration and Marketing Corporation Bill seeks, among other issues, to repeal the Minerals and Marketing Corporation of Zimbabwe Act, thereby, reshaping and reconfiguring and re-naming the Minerals Marketing Corporation of Zimbabwe (MMCZ) and create a new corporation — the Minerals Exploration and Marketing Corporation (MEMC). The new corporation will have two main objectives of mineral prospecting and exploration and mineral marketing.

Basically, the government is not increasing the number of parastatals. It is merely reconfiguring the current MMCZ and allocating it additional responsibilities. Beyond that, there seems to be a policy shift in terms of diamond sales contribution to State revenues.

MDC-T MP for Southerton Gift Chimanikire makes a point during debate on the Labour Ammendment Bill tabled before Parliament yesterday

This is reflected in clause 18(3), which says whenever the corporation sells diamonds, it shall pay to the Consolidated Revenue Fund (CRF), a special dividend of 15% of the gross value of the proceeds of the sale of the diamonds. This requirement raises the question of whether this does not amount to discrimination, which may attract a backlash from diamond miners. Why are they alone expected to make a special payment to the CRF? Why not all the other mining companies exploiting our other mineral resources? This observation is buttressed by the fact that this payment shall be made, notwithstanding, whether or not the corporation can afford the payment. It is also unusual and unique to define this payment as a dividend when it is calculated on the gross value of diamond sales.

Granted, the exploitation of diamond resources in Zimbabwe has marginally benefited the fiscus. The whole exploitation has been shrouded in secrecy, thereby, necessitating tougher measures from government in order for the State coffers to receive what is due to them. I, however, do not think such a legal provision will boost inflows into the fiscus. It is most likely to worsen the ease of doing business and deter investment into the sector and the expected dividend payments. Such a discriminatory provision is inconsistent with section 56 of the Constitution.

Clause 36 says the corporation shall receive proceeds from the sale of minerals, save in exceptional circumstances authorised by it. This provision largely replicates section 47 of the MMCZ Act, save for the proposal in sub-clause (3) that the corporation shall remit 0,5 % of the gross export sales of base and precious minerals to the Pan-African Minerals University of Science and Technology (PAMUST), established in terms of the Pan-African Minerals University of Science and Technology Act. If the assumption is correct that this amount is in addition to the commission that exporters pay to the corporation pursuant to the current legal framework — which will continue courtesy of clause 37 of the Bill — it must surely mean that this is an additional cost to miners.

It is not clear though what informs the decision to target exporters of base and “precious minerals” only. While the Bill defines “precious metals” and “precious stones”, it does not define “precious minerals”. Assuming precious minerals include diamonds, it must follow that for diamond miners, in addition to the special dividend provided for under clause 18 of 15% of gross sales, there is also this additional 0,5 % to the PAMUST. The goal and objective may be noble, but the risk of overburdening business by an accumulation of taxes coming in different shapes and sizes appears high.

Clause 7 provides for the constitution of the corporation’s board. Whereas under the MMCZ Act stakeholders, such as the Chamber of Mines and relevant trade unions, were consulted with respect to appointees to the board, the minister will under the bill only consult the President.

This is a retrogressive provision in my view. The involvement of critical stakeholders such as the Chamber of Mines engenders a participatory approach to public policymaking, which helps to reduce policy implementation difficulties. Allowing board members to be recommended by other primary stakeholders enables the minister to tap into the huge repository of knowledge existing in these other circles.

I, however, like clause 27 in Part V of the Bill, which deals with the conduct of mineral exploration. This clause gives the corporation discretion to acquire rights over any area of ground or mining location for purposes of carrying out prospecting and exploration activities. The corporation may do this in its own name, in partnership with other stakeholders or upon the instructions of the minister.

The bill is an attempt by government to understand the true value of our mineral resources. Companies have been getting mining concessions from the government and proceeded to exploit these resources without fully disclosing how much the concessions were worth. The result is that the government and the communities, in which these resources are exploited, have not fully benefitted from such exploitation.

There are, however, some provisions in the proposed legislation, especially those on payment of special dividend on gross income that should be re-looked at in order to attract the much needed investment into the sector.

● John Makamure is the executive director of the Southern African Parliamentary Support Trust. Feedback: [email protected]