proposed changes to mining legislation in zimbabwe | article | chambers and partners
Unique conditions may be provided for in the law to attach to exploration, ownership, exploitation, beneficiation, marketing and development of minerals declared or designated to be strategic. The Minister, in consultation with the Mining Affairs Board and subject to approval of the President may declare a mineral to be strategic or may remove a mineral from the list of strategic minerals.
The Secretary for Mines shall be the Cadastre Registrar. The Cadastre Registrar shall have a central mining cadastre office with exclusive jurisdiction over the whole country. The head office shall be in Harare.
A mining lease will confer exclusive right of mining any ore or deposit of the mineral authorised and any ore or deposit of any other mineral, except energy minerals, precious stones and declared strategic minerals, which may be discovered within the mining lease.
In respect of environmental matters, it is proposed that the Minister retains exclusive and original jurisdiction on mining in Zimbabwe and that the Cadastre Registrar requires environmental impact assessments to be carried out and submitted before any mining right or title is issued.
Notwithstanding the provisions of the Companies Act (Chapter 24:03), the directors of a company ormembers of a close corporation or syndicate are jointly and severally liablefor any unacceptable negative impact on the environment, including damage,degradation or pollution advertently or inadvertently caused by the company orclose corporation or syndicate which they represent or are represented.
A safety health and rehabilitation fund is proposed to be established and every miner shall make an annual contribution to the Safety Health and Rehabilitation Fund at the rate prescribed by the Minister from time to time. In prescribing the fees, the Minister shall differentiate the applicable fees for small scale miners and large scale miners.
It is proposed to prohibit export of raw or unprocessed minerals except with the written consent of the Minister. Beneficiation outside Zimbabwe of any mineral mined in Zimbabwe shall require written approval from the Minister.
All changes in the shareholding of mining companies will require to be notified to the Minister in writing within 14 days of the change and no shareholder of a company holding mining rights or titles shall sell or transfer a Zimbabwean registered security to a non-indigenous person without the written approval of the Minister. Any sale conducted without such approval shall be null and void.
Listed below are some of the important pieces of legislation that govern mining operations. Anyone involved in mining in Zimbabwe should be familiar with the provisions of these pieces of legislation as they detail the obligations of holders of mining locations.
There are other pieces of legislation that impinge on the operation of commercial ventures such as the Companies Act, the Sales Tax Act, Exchange Control Act and others that mining companies as commercial activities need to comply with. (Hard copies of all pieces of legislation may be purchased from thePrintflow).
The Mines and Minerals Act Chapter 21:05 is the law for the mining industry in Zimbabwe. There are other Acts and Regulations that draw their existence from this Mines and Minerals Act. The Act has been acknowledged as a good piece of legislation by both local and international investors. Given recent developments in the SADC region there is a growing need to refine the Act so that it continues to provide a competitive operating framework for investors. The government is in the process of amending the Mines and Minerals Act to provide stronger environmental provision in line with the Environmental Management Act that came into force in 2007. The amendments are also intended to:
Mineral resources are vested in the President of the Republic of Zimbabwe. This provision conforms to the international norm where resources are held by the state on behalf of the people of the country. One acquires the right to search for and work the resources by obtaining licences. These licences are applied for through the Mining Commissioner from the mining district in which the resource is located.
The dominion in the right of searching and mining for and disposing of all minerals, mineral oils and natural gases is vested in the President. Any person of 18 years of age or older who is a permanent resident of Zimbabwe or his agent may acquire one or more prospecting licences on payment of the appropriate fee. The licence to acquired is valid for 24 months. Any person may make written application to the Mining Affairs Board for authority to prospect on reserved ground
Any person above the age of 18 years may apply for a prospecting licence. The licence provides the right to search for minerals and peg claims. There two types of prospecting licences theOrdinary Prospecting Licenceand theSpecial Prospecting Licence.
Any person may make written application to the Board for an EPO in his/her favour over any defined area in Zimbabwe, including any area reserved from prospecting. On application the applicant shall pay a deposit, as gazetted from time to time (Contact to Geological Survey of Zimbabwe). If the Board is satisfied that the applicant is a fit and proper person to obtain the order and is of adequate financial standing to undertake the operations under the order; and that it would not be against the national interest to make such an order, then the Board may recommend to the Minister to make the EPO in favour of the applicant.
The rights granted under an order shall be personal to the authorised holder who may not cede or assign any such rights to another person. The Minister may, on the recommendation of the Mining Affairs Board and with the consent of the concession holder, which consent shall not be unreasonably withheld, authorise any person to peg and register for a mineral other than a mineral for which the concession holder is authorised to prospect.
The concession holder shall carry out the approved programme and submit to the Board a report of the work carried out during the period covered by the programme including expenditure incurred. If the concession holder fails to submit the report, he/she is notified in writing by the Board that his/her order is liable to be revoked. If no report is received within 21 days of such notification then the Minister shall revoke the order.
This title provides the holder with the right to prospect for minerals in an area reserved against prospecting and pegging of claims. The title provides the duration of validity of the right to prospect and peg and the terms and conditions under which title will operate. The Secretary for Mines issues the Special Grant.
The holder of a mining location or contiguous registered mining locations may make written application to the mining commissioner for the issue to him of a mining lease in respect of a defined area within which such locations are situated. The holder of a mining lease has the exclusive right of mining any deposit or mineral that occurs within the vertical limits of his lease.
The holder of one or more contiguous mining locations who intends to establish or develop a mine thereon and investment in the mine will be wholly or mainly in foreign currency and will exceed US$100 million in value, and the mines output is mainly intended primarily for export, may apply in writing to the mining commissioner for a special mining lease of a defined area within which his mining locations are situated.
The board may permit a person to make an application notwithstanding that either or both the criteria mentioned above will not be met, if the Board considers that it is desirable in the interest of the development of Zimbabwes mineral resources.
Having received the application the Board shall forward it to the Minister together with their recommendations. The Minister shall submit them to the President together with his own recommendation for the Presidents approval.
A holder of a prospecting licence may peg claims and register the claims for the purpose of mining. The maximum size of the each precious metal block of claims is 500m X 200m. This constitutes a block of 10 claims. Base metal claims pegged by a holder of an ordinary prospecting licence may not be more than 25 claims and each claim shall not exceed one hectare in extent. The length of any straight line between any two points may not exceed 250m. Base metals pegged by a holder of a special prospecting licence may not exceed 150 claims and each claim may not exceed one hectare in extent. The length of any straight line between any two points may not exceed 2000m.
Priority of acquisition of title to any location, reef or deposit, if such title has been dully maintained, shall in every case determine the rights as between the various peggers of mining locations as the aforesaid and in cases of dispute the rule shall be followed that, in the event of any rights of any subsequent pegger conflicting with the rights of a prior pegger, then, to the extend to which such rights conflict, the rights of any subsequent pegger shall be subordinate to those of the prior pegger.
The holder of any block of base mineral, reef or placer deposit claims registered as precious metal or of any mining lease shall, within six weeks of registration, apply to the mining commissioner for and obtain a certificate of inspection in respect of work executed on the mining location. The Secretary may authorise a mining commissioner to grant a protection certificate in respect of any block of reef or placer deposit claims.
Alluvial, eluvial, rubble deposit, dumps and precious metal blocks: The holder of such blocks shall continuously work his claims from the date of registration of such blocks and shall pay to the mining commissioner annually in advance the prescribed fee in respect of such blocks.
There are various entry points into mining. One may elect to start the process from prospecting stage until mining, while others may elect to enter into agreements to acquire mining locations owned by others. The later entry points are detailed below.
When any registered mining location or any interest therein is sold or otherwise alienated, the seller or person who so alienates shall notify the commissioner of the transaction within 60 days of the date of transaction. The seller shall provide the following information to the Mining Commissioner:
The agreement should be registered with the mining commissioner. A transfer duty is payable by the purchaser on the sell at a fee prescribed by parliament. This duty should be paid within six months. If payment is partly in cash and partly in shares of a company, the nominal value of the shares shall be used. In the case where payment is contingent upon some future event the purchaser shall give security to the satisfaction of the Mining Commissioner that he will pay the transfer duty at a fixed rate when the consideration becomes due.
Transfers can only be made to permanent residents of Zimbabwe. In the case where transfer is to be made to non-residents the Mining Commissioner has to receive assurance from Reserve Bank of Zimbabwe that all exchange Control requirements have been fully complied with.
If any holder of a registered mining location has agreed in writing to grant a tribute to any other person, the tributor may apply to the mining commissioner for the registration of a notorial deed embodying the terms of such agreement.
An option to purchase or otherwise deal with a mining location can be agreed between the holder of a mining location and the potential buyer. The holder may apply to the Mining Commissioner for registration of a notarial deed embodying the terms and conditions of the contract between the parties. A prescribed fee is payable.
perfomance of the zimbabwe mining sector in 2019 - mining zimbabwe
Total output figures of the major contributors to Zimbabwes mining sector revenue are definitely going to be lower by year-end (31 December 2019) than they were in 2018. That includes gold, platinum, chrome, diamond, coal, and nickel. These minerals also happen to be the key anchors of the US$12 billion Mining Target by 2023.
For gold, this is very unfortunate given that the general international price trend for gold for the past 5 years has been upwards. But then, it has been shown by empirical studies that the international price trend is not a significant explanatory variable for gold production in Zimbabwe; implying that there are other more preponderant factors that overshadow the international price effect. However, in terms of relative contribution to the economy gold has maintained its key role. By November it had contributed 43% of mineral exports, employed 30% of total formal mining labour, apart from the more than half a million artisanal and small-scale gold miners spread throughout the country.
Platinum prices have also remained generally subdued for the year as they have been for the past few years now. Output by year-end will be lower than last years 14.7 tons. This is despite the fact that the three primary producers continued to operate at full capacity. The price of palladium is excellent, as it is hovering around US$1,700 per ounce, even exceeding that for the booming gold sector and around double that for platinum. However, palladium is not yet counted among significant products because it is jointly produced with platinum and has generally been viewed as a by-product, rather than a co-product of the latter. This is despite a high level of production for last year at 12.1 tons. By any measure (output or revenue) it is probably time that the PGM sector stops being referred to as the platinum sector. The production levels for other PGMs which include rhodium, ruthenium, and iridium has remained insignificant in 2019. One of the key challenges, among others, in the sector, is the outstanding formal clarity of the sectors exemption from meeting the requirements of the Indigenization and Economic Act, which exemption has only been pronounced verbally and in other documents, with the Act itself not yet repealed.
Chrome output during the year has been lower than for 2018 mainly on the back of a 10% decline in capacity utilization in the sector from 80% in 2018, low ferrochrome prices and dilapidated transport infrastructure for movement of all chrome products (chrome ore, lumpy ore, and High Carbon Ferrochrome). The local pricing of raw chrome by the Minerals Marketing Corporation of Zimbabwe has also remained a sticking point in the development of the sector and agreement on this issue should be reached to enhance production in the sector. Artisanal and small-scale chrome miners have also not enjoyed as much support from institutions like RBZ as has their counterpart in the gold sector who have been supported technically and financially by the Fidelity Printers and Refineries (a subsidiary of the RBZ).
While there are four registered diamond companies in the country including Zimbabwe Consolidated Diamond Company, Murowa Diamonds, Anjin and Alrosa, only the first two were active in 2019, with the latter two still to commence production operations. Diamond production by year-end will be lower than last years 3.3 million carats, as it is projected to be 2.1 million carats (a 36% decline). This is on the back of a decline in capacity utilization from 90% to 74% in 2019 as well as the persistent high royalty rate of 15 %, which remained the highest for all the minerals and in the Southern African Region. It is commendable that the Minister of Finance and Economic Development announced a downward revision of the rate to 10% in the recent Budget Statement.
Like the four major minerals alluded to above, the rest of the minerals have recorded generally lower performance compared to 2018, including coal and nickel sectors. The average capacity utilization in the coal and nickel sectors has gone down by 32% and 30% respectively. Specific factors explaining the lower levels of capacity utilization include the low prices offered by the Zimbabwe Power Company for coal and antiquated equipment which is common to both sectors.
Generally the mining industry as a whole (including the six mentioned above and several other base metals, industrial minerals and dimension stones) faced several challenges during 2019. Major among these include: regular and prolonged power outages, inadequate foreign exchange retentions, high costs of production due to domestic inflation (which is fuelled by depreciation of the local currency) and high import costs, lower prices (for most of the minerals), low access to and high costs of finance (both operating and investment), a sub-optimal fiscal regime, lack of policy consistency and predictability and perceptions of political instability due to serious national political polarization. We need to address these issues to realize a better performance in 2020 and to achieve our US$12 billion Mining Industry Target by 2023.
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