FINANCE minister Tendai Biti has proposed a five-basis point rise in mining royalties for precious minerals as government attempts to boost revenue generated by the sector.
This comes after the Chamber of Mines of Zimbabwe last month challenged initial plans by the ministry of Economic Planning and Investment Promotion to raise the quantum of royalties up to 10%.
Presenting the 2010 National budget this week, the treasury minister said he made the decision after considering buoyant prices of precious minerals on the world market.
Currently, royalties on precious metals, that is, gold and platinum, are levied at a rate of 3% of the gross market value. “The international price of gold increased from an average of US$800 per ounce in November 2008 to about US$1 280 in November 2009, whilst, the price of platinum moved from US$870 per ounce to about US$1 450 per ounce during the same period,” Biti said.
“In order for the nation to benefit from the exploitation of these non-renewable natural resources, I propose to increase the rate of royalties on precious metals from 3% to 3.5% with effect from January 1 2010.”
He added that with effect from next year the Zimbabwe Revenue Authority would replace the Minerals Marketing Corporation of Zimbabwe in collecting the levies. This would be the second change in the last 10 years since Fidelity Refineries was suspended from collecting the revenue in 2004.
According to a draft Medium-Term Plan (2010-2015) — a policy document that is expected to succeed the Short Term Emergency Recovery Programme (which expires this December — government planned a ten-fold increase in royalties charged on foreign-owned mining companies exploring base metals. Proceeds of the mining levies according to the draft plan would be channelled towards a yet to be established sovereign fund to hedge the sector from exploration of the finite mineral resources.