THE Government, which has already scrapped Special Economic Zone (SEZ) status for mining projects, will remove tax havens for investors in the sector to enforce value-addition and beneficiation of minerals for maximum benefit to locals.
Previously, companies that had SEZ status benefited from various incentives that included tax exemptions among others, but Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube told Senate during debate of the 2024 National Budget that President Mnangagwa has appointed a Cabinet Committee to come up with measures that will ensure the country derives maximum rewards from its minerals.
The Cabinet Committee will, inter-alia, make recommendations on new mining regulations focusing on contracts, incentives for investors and revenues to ensure that the country benefits more from its vast mineral resources.
This followed concerns by senators that the country was not benefitting much from its minerals.
“As I speak, the President has set up special Cabinet Committee to look into these issues around mining sector, the incentives, revenues, contracts. The Committee will be reporting to the President in the next few months. I am a member of that Committee. Once that Committee has met and gone through the issues, I can assure you, there will be no more tax havens in mining, it would be a thing of the past,” he said.
Prof Ncube said three mining companies have been affected by the scrapping of SEZ status for mining of ore.
“They have been trying to persuade us to stay but then we have said to them look, you need to beneficiate, if you show us your beneficiation plans, what you produce in the end, we are happy to extend special economic zone status to only that portion of your business which is doing beneficiation,” Prof Ncube said.
“We have become very clear, we are going to revise the framework for the mining sector going forward. Then they need to create a template for how these investors should conduct corporate social responsibility. I agree, what we have proposed in this budget was the initial one percent tax or levy which will be ploughed back into those communities, but a more comprehensive framework should be developed.”
Manicaland Senator, Cde Irene Zindi suggested the fees for obtaining a mining licence, especially for foreigners, be reviewed upwards.
“This is a good idea, we will investigate this issue, already we are looking into the other issue of Exclusive Prospective Orders (EPO) licence fees. If a foreign investor is only paying US$1 500, that is a very low amount and we ought to raise it. I am aware that the Ministry of Mines is in hot pursuit on this issue,” she said.
Prof Ncube added that Government was going to be tough on the issuance of EPOs to ensure that investors awarded EPOs stick to the mineral they have been licenced for to curb leakages.
Chief Fortune Charumbira also bemoaned the low contribution to the fiscus by the mining sector as indicated in the Minister’s budget statement and called on Parliament to investigate the matter.
“Here (in the budget statement), you are saying that the total revenue of the mining sector has remained subdued and I am very concerned. You stated that platinum was number one contributor to revenue and that the contribution of gold remains insignificant at 0,33 percent despite accounting for about 32 percent of mineral exports — that is a serious contradiction. I believe as Parliament, we are meant to pursue this issue and ask why. How can gold contribution remain insignificant when we have said we have moved from 12 tonnes and we are now at 32 tonnes per year? Why would an increase in the production tonnage lead to insignificant contribution?”
Prof Ncube reiterated that these were some of the issues that would be addressed in the new regulations. – Herald
