Minister of Mines and Mining Development Hon Soda Zhemu said that he was not adequately informed about the concerns raised by Mining Executives regarding high government fees and royalties that are hindering the mining industry growth.
The mining industry in Zimbabwe has been grappling with challenges due to falling international commodity prices since 2023. Executives have cited the high royalties, fees, and taxes in the region as obstacles to foreign direct investment (FDI) inflows into the mining sector.
Despite the concerns raised by industry players, the new Minister said that he had not been made aware of these issues. He stated that industry officials should approach the Ministry or the Ministry of Finance with their concerns for appropriate action to be taken.
The government set a target for annual mining sector revenues to reach $12 billion by 2023 under a five-year strategy announced in 2018. However, the Chamber of Mines of Zimbabwe warned in 2022 that achieving this target would be an uphill task unless the industry’s problems were addressed.
According to concerns submitted by the Chamber of Mines of Zimbabwe in October, the mining industry has experienced a significant decline in prices for key minerals over the past 12 months. This, combined with increased costs, including a 40% rise in electricity prices and higher royalties for platinum and lithium, has severely impacted the viability of mining projects.
In interviews mining industry executives expressed concern over the onerous royalty regime, stating that it could ruin the sector.
Pfungwa Kunaka, the permanent secretary of the ministry, countered these claims, stating that the government has been supporting mining companies through various incentives. He mentioned VAT deferment, national project status, and duty rebates as examples of government support.
“Government is supportive of mining companies,” he said.
“It is offering incentives such as VAT deferment, giving projects the national project status and duty rebates where applicable. Sentiments are often raised that the royalty regime is burdensome.
“It would appear that generally, mining ventures are currently viable although the challenges will arise if the current slump in mineral prices continues for too long,” he added.
Zimbabwe is rich in mineral resources, including chrome, gold, nickel, diamond, iron ore, and platinum. The country has a competitive advantage in the mining sector with over 40 commercially exploitable minerals. However, addressing the challenges facing the industry is crucial for its growth and contribution to the economy.