Zimbabwe uses a combination of both fixed and variable royalty rates. Gold is the only mineral that attracts a variable royalty rate depending on the international market price per ounce. Above US$1200 per ounce of gold, the rate is 5% and anything below that attracts 3%. All other minerals have fixed rates, but they are differentiated with high-valued minerals like diamonds, platinum, lithium, and precious metals attracting higher rates compared to industrial or base metals, black granite, and coal.
Even though mining revenue in Zimbabwe is blighted by the lack of transparency, mining royalty is the only revenue stream that is distinctly reported by the Zimbabwe Revenue Authority (ZIMRA). Despite several policy pronouncements to join the Extractive Industry Transparency Initiative (EITI) in the past decade, nothing tangible materialised. Since the information on mining royalties is publicly available from revenue performance and annual reports generated by ZIMRA, it is of interest to share the performance of the mining royalties.
In 2020 and 2021, mining royalties contributed 3.25% and 2.97% to the total tax revenue.
All in all, mining royalties account for a small share of total government revenue, but a significant portion of the overall government revenue from mining. The tinkering of the royalty regime to build mineral reserves of precious metals and high-valued minerals is a step in the right direction that bodes well for intergenerational equity. After all, countries like the UK and France which import gold, with Africa being a major source of the supplies, have significant reserves of gold and established commodity exchange markets for metals. As part of decolonising benefit-sharing from mining, as opined by the President, building mineral reserves is fundamental to the quest of enhancing equitably benefit-sharing from mining.
The implementation part will ultimately determine the development impact of this policy measure. Can the RBZ of Zimbabwe be trusted given the mishaps around foreign currency management? Can a leopard change its spots?
By Mukasiri Sibanda for NewZwire
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