THE mining sector has been plunged into crisis, as some mining companies are failing to access money from their banks and clients abroad after it was seized by fiscal authorities in the United States over their dealings with the Mineral Marketing Corporation of Zimbabwe (MMCZ), which is under sanctions.
The US Department of the Treasury’s Office of Foreign Assets Control imposed sanctions on MMCZ in 2008 for “contributing to the undermining of democratic procedures and institutions in Zimbabwe”.
The MMCZ is the sole marketing and export agent for all Zimbabwean minerals, including nickel and chromite, excluding gold and silver.
Washington’s decision has left several mining companies in a lurch, with some even considering suspending operations until there is a solution.
This has crippled the entire mining sector, upon which President Emmerson Mnangagwa is pinning his hopes for economic revival.
The government is hoping to grow the mining sector to US$12 billion by 2023.
One miner told the Zimbabwe Independent yesterday that the situation had become desperate since they could not pay workers as a result of the withholding of funding by the United States.
“We were supposed to pay our workers by May 25, but we failed because the money that has been withheld was for salaries and other running costs. It is a major challenge,” the miner said. “If this situation persists we will have no choice but to suspend operations because it means we can’t buy consumables such as explosives and workers cannot come to work on empty stomachs.”
According to sources, miners have approached the government and the Reserve Bank of Zimbabwe (RBZ) over the crisis.
“We have spoken to ministry officials who have said they are preparing a statutory instrument that will deal with the crisis but we have not seen it yet,” the source, who requested not to be named, said.
The central bank revealed recently that the Zimbabwe Revenue Authority (Zimra) would now have the mandate to collect fees and commissions previously paid to the MMCZ.
“The bank has received numerous requests from mining exporters on the need to continuously improve the ease of doing business arising from complications around payment of fees and commissions by the Minerals Marketing Corporation of Zimbabwe,” RBZ governor John Mangudya said in a statement.
“To make statutory deductions easy for exporters of minerals, with immediate effect, all commissions and royalties that are due and deductible at the point of receipt of export proceeds will no longer be deducted by MMCZ.
“All applicable taxes shall be paid to the Zimbabwe Revenue Authority (Zimra) in the normal manner.”
MMCZ general manager Tongai Muzenda recently told the media that the firm had suffered as a result of the sanctions imposed by the US.
“We are feeling the impact of sanctions big time; the embargo is making it extremely difficult for us as the country’s mineral marketing arm in the sense that anything in terms of trade that we want to do using major currencies like the United States dollars, we are constrained,” he said.
Muzenda claimed that the country could have generated 50% more in earnings had it not been for the restrictions.