Zimbabwe’s legislators have suggested that the government should give mining companies between seven and 10 years to develop their operations before penalizing them for continuing to sell ore.
Presenting recommendations by the Parliamentary Portfolio Committee on Mines and Energy for the 2018 budget, chair Fani Munengami said the current framework in which the government seemed to be expecting accompany to simultaneously invest in mining development, set up smelter facilities, install base metal refineries as well as installing the precious metal refinery before commencing all extraction appeared not only as punitive but also impossible as investors need time to recover their capital before reinvesting it to the next stage of the value chain.
He said the beneficiation tax framework must be improved by granting investors some tax break or tax holidays between each stage of the beneficiation value chain to allow them time to recover committed capital so that they can reinvest into the next stage of the beneficiation value chain.
“As a committee we propose the following period breaks for the beneficiation tax framework.
- Mine Development – 7 to 10 years, depending on the nature of the project. The time frame must be sufficient enough for the company to develop mine and build sufficient feed stock for beneficiation.
- Smelter facility – 7 to 10 years, depending on the nature of the project. This period covers construction of the smelter of at least two years and five to seven years to recoup invested capital
- Base metal refinery – 7 to 10 years also. The time frame covers a minimum of two years for construction of the BMR and five to seven years to recoup invested capital. It is further proposed that individual company’s unique circumstances such as the life of the mine and size of the assets must be carefully weighed into the time line considerations. We are also imploring the Government and platinum producers to agree on a precious metal tour treatment facility for Zimbabwe as in the case of Fidelity Printers and Refineries Gold Processing. This would reduce burdened platinum producers and ensure huge capital savings that can be deployed in developing new mines and create more jobs.
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