Zimbabwe Mines amendment bill to curb leakages but powers given to President must be struck off

Excessive powers

A worrisome provision in the MMAB concerns the powers given to the President “to remit in whole or in part royalty payments for a specified period as an inducement to the commencement or continuation of mining operations, or the processing or refining within Zimbabwe of minerals or mineral-bearing products, or the development of any export market. Such remission may be backdated by up to 4 years.”

According to the Constitution, Section 299, Parliament must have oversight over State revenue and expenditures.

By wavering the payment of royalties, in effect, the President will be giving a subsidy to a concerned company, matters that must be dealt with Parliament as they debate and pass the national budget. For this reason, the Bill should remove the powers given to the President to cancel in full or in part royalties owed by a mining company regardless of the circumstances. 

The proposal to cancel royalty obligations and to backdate the cancellation for 4 years must go through the national budget processes for more transparency, public and Parliamentary scrutiny, and approval by the latter.

To sum up, the move to promote local beneficiation and value addition of minerals through a partial rebate of royalties and granting a full rebate on minerals consumed locally is like feeding the cows to get more milk. The powers given to ZIMRA to administer mining royalties will go a long way to curb revenue leakages.

All things considered; the powers given to the President to cancel mining royalty obligations must be struck off. Instead, the royalty remission proposals must go via the national budget process for public transparency and accountability to prevent abuse and respect the Constitution on Parliament oversight of state revenues and expenditures. Changes in the Finance Act are critical to ensure that minerals like palladium and rhodium that have surpassed platinum in terms of revenue contribution to the miners are distinctly charged royalties like platinum. In fixing royalty rates annually through the Finance Act, flexible royalty rates should be considered to make the mining tax regime more stable and predictable.

By Mukasiri Sibanda for NewZWire

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