Farai Mabeza, Senior Staff Writer 
THE Chamber of Mines of Zimbabwe (CoMZ) has written to Mines minister Zhemu Soda pleading for a rethink on some of the recently introduced tax measures targeting the mining sector in the 2024 Finance Act.
The letter, a copy of which was seen by The Financial Gazette and signed by chamber president Thomas Gono, was written after a meeting between the miners and the minister to put on record matters discussed.
According to Gono, the measures could negatively impact investments and growth of the mining industry. “We … note the introduction of the Special Capital Gains Tax (CGT) on transfer of mining titles in the Finance Bill.
Zhemu Soda, Mines Minister
Of concern to investors is the application of the tax in retrospect, backdated 10 years and for it to apply even if the titles had been forfeited or abandoned.
“We are of the view that investors or mineral producers that had com – plied with the law at the time they transferred title should not be affect – ed by this new law as it brings uncertainty on Zimbabwe as a destination for investments,” Gono said in the correspondence to the minister.
“Furthermore, the rate of tax at 20 percent is too high compared to what obtains in other mining jurisdictions, and thus has potential to undermine the country as a potential recipient of investments in mineral exploration.
We recommend the CGT to be maintained at five percent, which is fair and comparable to other mining jurisdictions.” The miners also appealed to the government to align the lithium beneficiation tax timeline with the beneficiation plan approval process.
The 2024 national budget pronounced that any value addition pro – cess that does not result in the pro – duction of lithium carbonate shall be liable to an export tax of six percent effective January 1, 2024. Lithium producing companies are however required to submit their beneficiation plans no later than March 31, 2024.
“We further implore the government to consider providing a window in line with the average time it takes to set up the beneficiation facilities for processing concentrates to lithium carbonate,” Gono said. Meanwhile, the collection of beneficiation tax on platinum group minerals concentrates commenced at the beginning of this year. “
The platinum producers had ap – pealed to the government that the implementation of this tax be aligned to the agreed roadmap between government and Zimplats wherein Zim – plats will toll process material from other producers once the additional smelters and the base metal refinery are commissioned in 2025.
“Information gathered from Zim – plats shows that they have progressed successfully in setting up the additional beneficiation facilities and will complete the projects within agreed timelines. In light of the above, we therefore appeal for the deferment of this tax,” Gono said.
CoMZ chief executive officer, Isaac Kwesu
Another matter raised in the letter was the proposed US$100 million in – vestment threshold for strategic minerals exploitation. The CoMZ pointed out that this was identical in text and structure to another section contained in the Mines and Minerals Act Amendment Bill (HB 10 of 2022) that received an adverse report from the Parliamentary Legal Committee (PLC).
“We believe the reasons for the adverse report was that the provisions on strategic minerals in the Mines and Minerals Act Amendment Bill infringed on sections of the Constitution.
“We believe that the structure and location of the majority of ore bodies in Zimbabwe occur in such a manner that they don’t necessarily require an investment of US$100 million,” Gono said.
“Thus, the prescription of a mini – mum capital requirement of US$100 million will undermine investment and production of strategic minerals and may also result in unnecessary bureaucratic procedures that consume time of both the investor and government as investors all and sundry would be required to apply to the Minister of Mines for waivers of the US$100 million threshold.
“Whilst we note the Finance Bill accommodated a section on small scale miners, what is important to note is that all investments below US$100 million remain predominantly of large-scale mining structure.” newsdesk@fingaz.co.zw
