Resource sector confident of meeting 2022 growth targets
The resource extraction sector is confident of attaining the 2022 growth projections of 8 percent as long as Government provides major enablers and immediately resolve matters that weigh down on the miners’ performance.
The sector is estimated to grow 3,4 percent in 2021, before reaching a peak of 8 percent in 2022 as it moves towards attaining the US$12 billion mining industry target for 2023.
In the 2022 National Budget, the Mines and Mining Development Ministry was allocated $3 billion that will enable it to implement a number of programmes that will assist the mining sector to attain its desired growth by 2023.
Chamber of Mines Zimbabwe president, Colin Chibafa, said that the private sector is prepared to work closely with the Government to resolve all matters that weigh down the performance of the industry.
“With adequate support that meets the expectations of mining companies, the growth target of 8 percent is achievable.
“The mining industry is upbeat about prospects for 2022 and we hope that with the cordial working relationship with the Government, most key matters will be resolved and mining companies will be able to meet their production targets and support the attainment of the mining growth target,” he said.
Zimbabwe is targeting a fourfold increase in revenue from minerals by 2023, under the policy document, known as the Strategic Road to the Achievement of $12 billion by 2023, which will see gold exports at $4 billion and platinum at $3 billion.
Chibafa said that the Ministry of Mines and Mining Development requires support to meet most of the outstanding policy and legislative matters for the mining industry that will promote the attainment of the US$12 billion milestone by 2023.
“We feel the $3 billion (0.3 percent of total budget) may not be adequate, and the Ministry will remain underfunded to discharge its mandate,” he noted.
Chibafa indicated that the 2022 National Budget seeks to consolidate the economic recovery momentum experienced in 2021, while ramping up revenue collections through a raft of tax measures that seek to plug revenue leakages.
“We also see increased appetite to spend on agriculture, infrastructure and provision of social safety nets, anchored on deployment of SDR funds,” he said.
On the other hand, he highlighted that the mining industry had submitted proposals into the National Budget that related to fiscal support measures to unlock the full potential of the mining industry to enable the sector to optimally contribute to the socio-economic development of the country.
He said only one of the sector player’s submissions clarifying the calculation of royalties for PGMs was incorporated.
“We are dissatisfied that key proposals including measures to improve availability of foreign currency to fund operations and expansion projects through allowing mining companies to pay taxes in local currency, the proposal for removal of beneficiation taxes on PGMs and Lithium to unlock investments in the sectors as well as bringing finality to the exemption of the mining sector from complying with the equity thresholds of Indigenisation Act were not accommodated in the National Budget.
“We will continue engaging the Government on these matters and we are grateful that both parties seem to be converging in terms of understanding of the principles around these matters,” Chibafa said, adding that these matters need to receive attention urgently.
Chibafa said that given the pricing distortions in the market, miners are being penalised through an effective 20 percent tax on their export proceeds since they are supposed to surrender 40 percent of their export receipts at the official exchange rate yet these proceeds only have 50 percent purchasing power.
“Government itself does not accept miners to utilise these ZWL proceeds to pay taxes!
Therefore, in effect, these ZWL proceeds from surrender have limited usage and value. This is not sustainable. We hope that the Monetary Policy Statement will close the policy gaps and provide the necessary support to the productive sectors so that they anchor economic recovery,” he said.
Through the 2023 mining sector vision policy document, the government is focusing on “value addition, enhanced investment within the sector, increased productivity and employment creation and increased exports and foreign-currency generation.
Private sector is expected to play a big role in the attainment of the envisaged growth while the government will facilitate the ease of doing business to encourage investments in the sector.