Mnangagwa says Zimbabwe is now on the rise- mining companies to pay half their royalties in commodities

To that end, we have decided on this new policy which is dynamic, and which for a start targets four of our key minerals. Two of them are precious; they are gold and diamonds. These must now be stockpiled both for prudence and inter-generational equity. The other two are high-value minerals, and these are lithium and platinum group of metals, PGMs.

As with all other non-renewables, these strategic minerals are finite. They will exhaust at some stage in the life of our nation. When that day comes, we have to have something to show and share with those who come after us. Hence, this policy we have just unveiled, which takes effect from this month of October 2022 onwards. I would have wanted this to start last month, in September; this could not happen since certain things needed finalising. Now we are ready.

How does this new policy play out? Essentially it pans out in the way we now interpret our old policy on royalties, by which miners have always paid an output-based fee to Government. Simply put, a royalty is a share of output which Central Government levies on all miners privileged to exploit our finite subsoil assets. This takes the form of a percentage on output — say 5 percent — which Government collects in the form of a fee. We are now changing this.

Starting this October, Government now requires that part of these royalties come as actual refined mining product in respect of each of the four minerals or group of minerals I have alluded to.

The other part of the royalties will, as before, come as cash to underwrite the business of Government. This split and two-pronged approach to royalty payments allows us to build physical reserves of precious and strategic minerals, while also ensuring we continue to get our revenue for the day-to-day running of Government business.

I described the policy as dynamic. This is for two reasons. Firstly, to suggest that Government reserves the leeway to add or subtract minerals affected by this dual/split interpretation of mining royalties, as circumstances warrant.

In doing so, Government will be guided both by national subsoil reserves of any one mineral, and by global demand there is, and by, therefore, value the mineral fetches on the global market.

Our policy on mining royalties should never be frozen in time; it must respond both to the geological scarcity of the resource, and to global demand trends.

Second, I am aware that in geological terms, no mineral exists or is extracted singly. Most target minerals come with by-products. For instance, platinum comes alongside nine other minerals, each of which assumes different value at any one time on the global market. This is why we speak of platinum group of minerals, PGMs. As I write, by-products from platinum mining, such as rhodium, palladium, silver, cobalt and gold, now account for 80 percent of mining revenues at today’s prices, with the flagship platinum only contributing a paltry 20 percent! Our policy should, thus, be flexible enough to respond to such changes and trends in the global metals market.

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