Provide Incentives for Value Addition, Offer Tax Holidays to Improve Critical Mineral Sector – Gong
Bikita Minerals Managing Director Xuedong Gong has reiterated that for the country to benefit from critical minerals, it is important to ensure incentives and tax holidays are given to companies promoting beneficiation and value addition of minerals.
Business writer
In a compelling address at the Chamber of Mines of Zimbabwe Annual General Meeting and Conference 2024 Critical Minerals Symposium held at Elephant Hills Hotel in Victoria Falls on Wednesday, Xuedong Gong, Managing Director of Bikita Minerals, emphasized the necessity for governmental incentives and clear policies to bolster Zimbabwe’s critical mineral sector.
Owned by Sinomine, Bikita Minerals has been at the forefront of lithium production, yet faces significant challenges due to fluctuating market conditions and regulatory uncertainties.
Local Processing and Value Addition
Gong highlighted the strategic importance of local processing and beneficiation in the mineral sector.
“Realized through value addition and beneficiation, we know that by processing locally, we stand to gain more than by only exporting raw materials. However, the drop in PGM prices has hit plans for value addition hard. Despite this, we still submit our advised plans to the Ministry of Mines, just like other producers,” Gong said.
Investor Confidence and Policy Uncertainty
A significant portion of Gong’s address was dedicated to the issue of investor confidence, which he described as being “very low due to policy uncertainty.”
He elaborated, “Zimbabwe’s regulatory environment for mining and investment has been perceived as challenging, with concerns around policy unpredictability. For instance, some ideas from the government change very frequently, impacting our strategies significantly. What we did last year is completely altered by new government directives this year.”
The Role of Government in Creating an Enabling Environment
Gong urged the Zimbabwean government to recognize its critical role in fostering a conducive environment for lithium producers.
“We hope the Zimbabwean government understands its critical role in creating an enabling environment for lithium producers. Clear and consistent policies on licensing, taxation, and export regulations are essential to provide certainty and attract investors. By aligning policies with industry needs and global best practices, the government can promote sustainable growth and innovation in the lithium sector,” he stated.
Infrastructure Challenges
In addition to regulatory issues, Gong pointed out the infrastructure deficits that hinder the development of new investments in the lithium sector. “For new investments in lithium, we require basic infrastructure, such as roads, transportation, power, and water supply. The lack of these in lithium-rich regions can hinder exploration and extraction of lithium reserves, significantly influencing production costs,” he explained.
The absence of adequate infrastructure not only increases operational costs but also limits the ability to compete in the global market. To mitigate these challenges, Gong called for substantial government support to develop the necessary infrastructure.
Incentives and Tax Holidays
In his concluding remarks, Gong made a strong appeal for government incentives to support the critical mineral sector.
“Therefore, we urge the government to provide incentives for value addition and offer tax holidays for new investments. Ensuring our products are competitively priced on the global market requires substantial support from the government,” he emphasized.
Such incentives are crucial for fostering a robust mining sector capable of driving economic growth and innovation. Tax holidays for new investments can attract fresh capital, encourage technological advancements, and ensure the sustainability of the industry.