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Victoria Falls - Zimbabwe mining executives and government officials deliberate over fiscal, industry, and macro issues inside the Elephant Hills Resort in Victoria Falls while birds chirp and chirrup outside, helicopters hover above and some warthogs roam the sprawling lawn in front of the hotel.
This is day two of the chamber of mines meeting and chiefs from the big mining houses took turns to address delegates. Softer commodity prices topped the agenda followed by a constraining business operating environment yet by the end of deliberations, there were no clear-cut paths on how to effectively address these.
Winston Chitando, executive chairperson of Mimosa, which is jointly owned by Impala Platinum and Sibanye Gold said more than $3bn in fresh capital is required to boost platinum mining in Zimbabwe. Other executives talked about the need by government to address the ease of doing business, policy inconsistencies and other macro-economic issues.
“Our mining industry … continued to operate below capacity on the backdrop of depressed prices, capital shortages and high cost structure,” said Toindepi Muganyi, president of the Chamber of Mines of Zimbabwe in a report released at the meeting.
But far from the annual meetings, there appears to be some mistrust between the two parties as they both seek to score favourable points. There are assurances from the miners that information gaps should be removed and greater calls for transparency.
Government officials accuse the miners, especially the SA platinum groups, of not properly accounting for all minerals they export out of the country. The miners say they properly account and they give out figures detailing how revenue from mining in Zimbabwe is distributed.
“The contribution of the mining sector to the fiscus is still below expectations and we want this to improve. We recognise the issues they are facing as an industry but we have an obligation to collect royalties, taxes and mine fees as government,” a government official attending the yearly mining industry indaba told Fin24.
The government acknowledges that regulatory issues have been a burden, with policies such as indigenisation scaring off new investments. Some legislations will be finalised and these include a law to enforce all miners to market their minerals under a state owned company as the state presses for more revenue from the mining industry.
Isaac Kwesu, chief executive officer of the Chamber of Mines said the indigenisation policy, under which all foreign firms would be required to cede majority shares to local groups, had “weighed down on the industry’s effort to mobilise external capital”.
The miners are also calling for an electricity tariff that reflects mineral prices but Patterson Mbiriri, permanent secretary for energy says this is not possible.
“A power tariff reflecting mineral prices is just not possible. It would have been possible for the oil sector but the confidence to apply this for mining is very low,” he said. This leaves the miners at the expense of a power tariff increase that the government is set to introduce.
But there are bigger issues that were left out; demands for double quick platinum beneficiation inside the country were peripheral.
The government did not address sticking issues in the diamond mining industry where it is consolidating operations into one company in which the state will have half the shares and the issue of land claims that are being taken over from existing miners was ignored.
From the government side, Mines Minister said in his speech that the state expects mining companies to procure more locally. He said miners should retain about 75% of their revenue as local content to pay wages, taxes and community share ownership schemes.
“Government is concerned that that only (about) 5% of goods (for the mining industry) are manufactured locally. The mining sector must strategize on how local companies can be capacitated to produce locally,” he said.
The policy for miners to retain 75% of their revenues inside Zimbabwe is being viewed as a backdoor means to address cash shortages in the country. The resource rich southern African country is battling severe cash shortages and the government has had tax disputes with some miners.
