Prohibitive Mining licencing fees a “back-stab”
to sustainable mining development
The Minister of Mines and Mining Development has in terms of section 403 of the Mines and Minerals Act [Chapter 21:05] increased mining fees by over 800 percent quoting the fees in United States dollars but payable at the prevailing exchange rate. This is highlighted in the gazetted new mining fees. An ordinary prospecting licence was previously capped at ZWL$1,000,00 and is now US$100,00 which is ZWL$8 300 at the prevailing auction rate. Registration as an approved prospector is now amended to US$ 4,000,00 from ZWL$ 20,000,00, with an application for revocation of forfeiture now US$1, 000,00 from ZWL$ 5,000,00, Application for a mining lease is now US$2 000,00 (from ZWL$ 10,000,00). Application for a special mining lease is now pegged at US$5,000,00 (ZWL$ 50,000,00) while an application for protection against forfeiture is now US$100,00 from ZWL$500,00. The Minister also pegged an application for a special grant to mine at US$2 000,00 from ZWL$ 10,000,00. This increase also includes a custom milling licence of US$2000 from ZWL$25,000,00 per year and operating without custom milling licence fine now stands at US$5000 from ZWL$ 25,000,00.
come at a time when the mining sector is expected to contribute immensely to
the 12billion mining industry. Vision 2030 also highlights how it will leverage
on the diversified mineral resource base to help grow the economy. However,
these changes do not distinguish between the Large-scale miners and Artisanal
Miners, foreign and domestic sector players. They are just cross cutting around
all the different sectors which is a huge challenge in terms of affordability
and inclusivity with the ASM sector likely going to be affected the most. Other
regional countries such as Zambia have made this aspect quite clear. Zambia Mining licenses fees are distinguished between large
scale, small scale and artisanal miners which is not the case for Zimbabwe.
This article seeks to bring out the implications of the price increment on the
mining sector productivity and growth of the Artisanal Mining Sector which has
for the past few years been contributing immensely to gold deliveries. A quick
assessment of the Artisanal Small-Scale Miners’ reaction to this development
shows their disgruntlement, noting that this excludes them especially by giving
them the same conditions as Large Scale Miners and Foreign Investors. This
reflects one of the key challenges in Zimbabwe’s mining sector, the weak local
content policies which tend to disadvantage the locals when it comes to
participating in the mineral value chain.
the Mining regulation No.24
and small-scale miners have expressed concern that the fees are too high
considering that several of them could not afford the old mining license fees.
Mine licencing ought to be a regulatory approach, however according to the Mines
and Minerals Act, the “Minister may make
such regulations as he may deem expedient to give force or effect to this Act
or for its better administration” giving
powers to the Minister to make such changes. The implication of the regulation
is more on the downside for ASM and may have a toll on the mining industry
of ASM growth and participation in the Mineral Value Chain
announced changes will have implications on the participation of locals in the
mineral value chain. Recently there have been efforts to revamp the industry to
make sure that it contributes the expected US$12 billion to the economy. Some
initiatives that were introduced include the ‘Use it or Lose it’ principle meant
to improve the productivity of the mining sector by making sure that the
potential is harnessed and utilised. The change in the licensing fees at a time
when the ASM sector is in chaos due to inaccessibility of mining titles, the
high prices is likely to make it unaffordable for some locals. Most of the locals
who have been participating in the ASM sector are unemployed youths who have
limited capital to increase their production or to participate fully in the
mineral value chain. The high fees are now exclusionary and will force the local
ASM to engage more in illegal lower tires of the value chain. The advantage of having locals participate at
the high stages of the value chain is that the economic benefits are most
likely to benefit the nation and it also encourages them to operate in a formal
way. It remains a challenge when the growth of ASM is not supported and
promoted by favourable policies to encourage formalisation.
‘the goose that lays the golden egg.’
and small-scale mining sector is the source of livelihood for several mining
communities. The sector has been producing more through gold deliveries to
Fidelity Printers and Refiners.
There is a need to formalise the sector and create decent work for these
communities in an effort to promote sustainable mining development and transform
the economy into the upper middle-income economy as envisioned.
of the Mining Regulation
licencing fees by 800% defies logic to formalise and promote business ventures
in the artisanal and small-scale mining space. The move has potential to
exacerbate corruption and illicit smuggling. The country is losing billions of
dollars through illicit financial flows.
Licencing and regulating mining operations is urgently needed. The move to
increase the licensing fees is generally counterproductive. Licencing is
generally used as a regulatory tool, rather than a revenue generation tool.
With licences being charged at an all-time high fee, this is more of a revenue
collection scheme than servicing approach. Acquiring a mining claim is now
exorbitant for the ordinary citizen.
The ministry has
been attributing inefficiency and failure to inspect mines to inadequate
resources. Some argue that this increase in licensing could be a move to
generate revenue meant to improve service delivery. Although this argument may
justify the increase, the benefit is on the downside. Revenue generation should
contribute to better service delivery.
on industry performance
With much of
deliverable coming from the ASM sector, the move is being perceived as an
approach to discourage small scale mining. The policies and regulations are not
in favour of the mining ‘work horses’ but are in favour of already established
mining players. Through the Mines bills there is a need to separate the
large-scale and small-scale miners and come up with different licencing regimes
that favour growth of the small-scale miners. The ministry needs to address
challenges that are affecting artisanal and small-scale miners.
is a major contributor of government funds and this has not been with the
interests of the ASM sector in consideration. Recently the Ministry of Mines
and Mining Development and the Ministry of Finance granted a five-year tax
relief to Great Dyke Investments to promote rapid production. However, a
growing sector still struggling to acquire mining licences is being charged
fees they cannot afford. Several Civil Society Organisations (CSOs) such as the
Zimbabwe Environmental Law Association have been advocating for a two-tier
mining fees system, one for foreign owned companies and the other for the ASM
sector. The CSOs have been advocating for a just access to land for vulnerable
groups and these licencing fees shun the effort for an inclusive mining sector.
are high, and forfeiture of mining claims will be high. The cost of re-pegging
or revocation of forecited claim will be high for small scale miners and this
may not be supported by repegging by mining corporations since small scale miners
work on marginal orebodies. Instead, the economy will be losing out to illegal
mining activities and illicit trades.
This is all against the development agenda anchored on mining. Reports
were recorded of miners who were holding mining claims for speculative
purposes, this effort may drive through the use of it or lose it and include
miners who have the capacity to mine to be fully involved in the sector. The
question goes back to the livelihood that will be lost in poor mining
The high fees are hardly affordable to
artisanal and small-scale miners, this may compel miners to form groupings such
as artisanal miners’ cooperatives, and associations to register mining claims
and operate as organised mining groups. This may be a way to encourage small
scale miners to consider mining as a business. Extreme requirements may
cultivate a perception on how serious mining is. The pseudo formalisation
structures in other areas have proven to be effective, delivering higher
production and by employing good work ethics.
Illicit Financial Flows, closing the loopholes.
of Mines and Mining Development (MMMD) must enhance transparency and
accountability in the administration of mining titles through computerisation
of the long overdue mining cadastre system so that it can restore people’s
confidence in it. The price of compliance continues to go up. There is no Ease
of doing business in ASM which encourages rent seeking behaviour and fosters
illicit gold trade. Due to the high licensing fees the ASM will prefer to
continue operating illegally which will increase illicit financial flows that
have been robbing the country of the much-needed revenue to fund social service
delivery. Gold deliveries have been dropping and this will affect revenue
mobilisation, the doorway to mineral leakages and gold trade will continue as
there are no incentives for the ASM sector or efforts to formalise and deal
with the challenges being faced in the sector. Corruption will remain rife as
the price of being formal continues to rise at a time when the sector is a key
livelihood option for many who do not have capital. Recently a tax break was
given to a foreign company and therefore several arguments emphasize that, priority
and incentives must also be given to local citizens as well.
and Concerns raised by Artisanal Miners.
“The fee increment will certainly boot out
small fish from the field. With EPOs all over the country the big
fish-Large Scale Mines are just finding a way of taking over from the
small-scale mines because many will not be able to pay the fees. Amid the
pandemic miners were not expecting this. Now that it will cost up to 2000 us to
get a mining claim including peggers. Then for one to operate will need several
licences EMA & Explosive permits, Personal Protective Equipment for workers
then inputs and equipment if all added one would need at least $5000 as a small
start-up. An indigenous miner in this economy. This will now increase corruption
& gold illicit flows because people will start to mine without papers &
sell to the black market more. The mines guys will come for inspections, find
people without papers then deal corruptly and leave them, the flora & fauna
will do the same.”
“I wonder if at times the ministry is not
serious at addressing issues affecting us in this sector. How can Artisanal and
Small-scale miners formalise their operations under such circumstances. Tax
collection is a major contributor of government funds but not without considering
the growing sector. Of late we heard of the ministry of mines and the ministry
of finance giving a tax relief for 5 years to a mining company in the Great
Dyke and coming to strangle us, does this make sense. We have always been
advocating for a two-tier mining fees system, one for foreign owned companies
and the other for the Artisanal and Small-scale mining sector. If these fees are
anything to go by, then what it means is simply that the Artisanal and
Small-scale mining sector will die a natural death”.
“Those increases on inspections, etc., are
on the high side, higher than even when we were in a fully dollarized
economy. Now a 10ha gold block is $400usd for an annual inspection! It was
never that high even when the USD was reigning supreme. I remember figures of
$100usd and $200usd. Why such a steep increase?”
“Hope if miners cry with one voice and ZMF
as the advocate, the ministry will reverse because it’s too much. Amid the
pandemic and the rain season miners are going through tough times, high cost of
production, limited workers, renewing of several licences”.
must shift from the traditional economics of looking at Foreign Direct
Investment, as it comes with conditions that are not favourable to growing the
2. History and
economics share a common ground; there is a need to wake to reality and empower locals
who will then reinvest in the economic development of this country. There is a need
for think tanks who come up with homegrown solutions on how to grow this
economy using locally available resources. We need to shift from a system of
Treasury raising income by raising fees. There are other alternatives. A little
funding for the small-scale mining sector will go a long way in bringing about
the much-needed finance. Double standards will not benefit the government.
Miners Federation should look at the fees and engage with the MMMD to adjust
the fees for ASM.
- The Ministry of Mines
needs to prioritise the local mining investors and give them incentives to
formalise mining operations while discouraging illicit trade. Licencing is
meant for regulation and higher fees promote illegal mining.
- The government should
distinguish the licensing fees for ASM sector and Large-Scale Sector, Locals
and Foreigners like its regional peers such as Zambia.
- The ministry through the
mines bill should consider formulating different registration regimes for
artisanal and small-scale miners since the group is mainly characterised
by vulnerable groups seeking a source of livelihood. Attention should be
on developing the sector rather than formulating and manipulating regulations.
- Engagements and consultations are lacking between the
government and the stakeholders in the mining sector. The Ministry should ensure
broad consultations are undertaken before adopting and implementing any
policy so that the interest of the miners is also reflected in the mining
Environmental Law Association
“Environmental justice through sustainable and equitable
utilisation of natural resources and environmental protection”
Zimbabwe Environmental Law Association
26 B Seke Road, Hatfield, Harare, Zimbabwe
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