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Zim needs investor-friendly policies - mine chiefs

Mar 07 2015 07:00
Memory Mataranyika

Harare - A sound, conducive policy and economic framework are prerequisites for investment inflows into mining projects in Zimbabwe, mining executives in Zimbabwe told industry and government officials in Harare on Friday.

The government says it is realising fewer benefits from the country's mineral riches. Zimbabwe has the world's second-largest platinum reserves and vast deposits of other minerals.

"Why can't these mines that are at break even (or that are not profitable because of taxes and levies) close down? There is money at the mines and we need to interrogate issues beyond figures," said Fortune Charumbira, president of the chief's council in Zimbabwe.

READ: SA miners in Zim encounter headwinds

Mimosa executive chairperson Winston Chitando said any direct charge on revenues would have an impact on the breakeven status of mining operations. The government recently levied a 15% tax on raw platinum exports as a measure to force miners of the precious metal to build a refinery inside the country.

He said mining investors only extract what makes economic sense. Other executives at the indaba said the economics of mining in Zimbabwe was affected by the regulatory, fiscal and policy framework.

"Economics will determine the level of investment which will flow into new projects and which will flow into expansion projects," Chitando said.

Collins Chibafa, a senior executive at Anglo American Platinum’s [JSE:AMS] wholly-owned Unki mine in Zimbabwe, said the government should "provide a stable, predictable and competitive policy environment".

He said the government should incentivise miners and use the carrot approach instead of the current stick approach in enforcing policy positions. Tax burdens would also "undermine investment" in the country's mining industry.

Chamber of Mines of Zimbabwe president Alex Mhembere said Zimbabwe's mineral productivity was declining. The country urgently needs to address it's policy framework in order to attract fresh capital investments.

"Prices have been falling down and there is nothing we can do about that. But we can do something on the development of new mines and attracting investment. There is not enough exploration to broaden our resource base," he said.

Mines and Mining Development Minister Walter Chidakwa did not attend the meeting. Tensions are reportedly stretched between mining executives and government officials.

The mining executives are now reportedly lobbying parliament for the government to revoke the 15% levy on raw platinum exports.  Finance Minister Patrick Chinamasa said this week that he had not seen tangible work on how the platinum mines intend to pursue mineral beneficiation in Zimbabwe.

Deloitte Zimbabwe said in a presentation at the indaba that there is need for investment in exploration activity and recapitalisation of mines that have been placed on hold. Rio Zim and Metallon Gold are some of the mining companies in Zimbabwe that have said they are revivong their non-operating gold mines.

"We need a fiscal policy that encourages growth and a legislative policy that enables lower costs of production," said Deloitte Zimbabwe in its presentation.

Foreign mines in Zimbabwe are required to give away majority shares into the hands of black Zimbabwean groups. They have also complained of higher taxes and royalties

zimbabwe  |  mining
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