Zimbabwean companies in the grip of new mining controls

Mining News  |  2013-05-09 02:07:49   |   By

The new mining controls imposed by Zimbabwe on mining companies has put the industry under pressure, amid fears of imposition of new tax to fund the upcoming polls in the country

HARARE (Scrap Monster) : The new mining controls imposed by Zimbabwe on mining companies has put the industry under pressure, amid fears of imposition of new tax to fund the upcoming polls in the country.

The country’s newly drafted policy proposes that all mining companies should sell their mineral output to the State through the state-owned Minerals Marketing Corporation of Zimbabwe, which in turn will guarantee the miners with fair market price for their products.

In addition to putting controls on mineral sales, the draft policy also proposes to restrict the mining of certain minerals-mainly diamonds, to state owned companies. Further the government is reportedly revising its contentious indigenization laws which could see government or local companies grabbing 51% stake in foreign companies. The government has not yet been able to reach consensus with foreign mining majors operating in the country on the implementation of the indigenization policy.

The country’s Finance Minister last week hinted on introduction of fresh tax to fund the polls.

Mining is believed to be the engine that powers the economic growth of the country. According to statistics released by the Zimbabwe Revenue Authority (Zimra), the revenue collections out of mining during the first quarter of the year have surpassed all expectations, recording a big jump of 213% year-on-year. The contribution to the coffers by the country’s mining sector has skyrocketed to $43.1 million.

The new proposals by the Government may see the existing mining companies in the region which are already under pressure to face tougher times going forward. The all-the-time changing rules and policies may keep new mining investments in the region at bay.