Mining firms have raised concerns over exorbitant levies charged by local authorities from where they operate as well as high environmental fees for new projects.
According to a recent mining survey report, mining executives interviewed said the levies by rural district councils (RDCs) were too high while the Environmental Impact Assessment (EIA) charges by the Environmental Management Agency was discouraging new projects.
“Almost all respondents indicated that the RDCs charges are high, unaffordable and vary with the district,” said the survey. “As was the case in 2020, all respondents expressed concerns over the RDCs determining unit taxes (based on budgetary requirements.
“Some respondents also indicated that some RDCs are invoicing companies in foreign currency.”
No immediate official comment could be obtained from the Ministry of Local Government and Public Works. The mining companies said they expected the Government to harmonise the taxes for RDCs while allowing them to pay on local currency.
On the environmental charges, the survey, citing mining executives, said “all respondents indicated that the Environmental Impact Assessment at 1,2 percent of a project cost with a cap of US$2 million is prohibitive for new projects and discourage investments into the mining sector”, urging the Government to reduce the fee. Zimbabwe is targeting to grow revenue from minerals to US$12 billion by 2023 as it seeks to transform the country into upper middle income status by 2030.
Gold exports are expected to reach US$4 billion while platinum exports are targeted to hit US$3 billion. In the report, mining executives expressed confidence about future industry prospects on the back of positive commodity price outlook, improved capacity utilisation and anticipated increase in output.
But they expect the domestic investment climate, characterised by high costs of capital, foreign currency constraints and poor infrastructure, to remain depressed. The Mining Business Confidence Index (MBCI), which gauges confidence among local miners, is expected to increase to 17 next year, from 9 in 2021 the biggest jump in nearly four years.
The index scale ranges from -100 to +100, with the lowest score representing the least level of confidence and the biggest score representing the highest.
“Generally, mining executives are confident about the prospects for their businesses in 2022,”
“Notable among the positive sentiments include optimism about commodity price outlook, improvement in capacity utilisation and anticipated mineral output growth.
“The majority of the mining executives surveyed said they were planning to ramp up production in 2022 by ranges of between 3 percent and 100 percent.”