Business Reporter
Small scale gold miners, led by the umbrella body — the Gold Miners Association of Zimbabwe — have expressed reservations over some 2014 budget provisions they say could negatively affect their operations. While ecstatic recognition of small scale mining has been accorded as captured in Government’s new economic plan, the miners said a number of fiscal policy proposals could harm the growth of small scale miners. Small scale miners account for about 50 percent of the country’s annual bullion output.
In its position paper on the 2014 National Budget presented by Finance Minister Patrick Chinamasa last month the Gold Miners Association of Zimbabwe said the Government needed to look at issues across ministries and agencies that burden their mining activities with high additional costs. GMAZ said such impediments were not consistent with mining sector driven objectives of the Zimbabwe Agenda for Socio-Economic Transformation, Government’s new medium term policy for the period 2014 to 2018, which recognises mining and beneficiation as critical elements for medium term growth.
“The reduction of royalty to 3 percent translates to better gold prices being paid to small scale gold producers. However, the provision that production should not exceed 500g is counterproductive in a number of ways.
“It encourages producers to divert any production that is greater than 500g to the black market or to misrepresent production figures. The Gold Miners Association of Zimbabwe is committed to 100 percent formalisation of the gold mining activities with a minimum of 400g per month without maximum.”
The small scale gold miners said they were working hard to ensure formalisation of all artisanal mining activities after Government proposed decriminalisation of their operations, but said it has in many instances faced resistance from cartels and individuals benefiting from thriving black market for the bullion.“GMAZ acknowledges that its goal for 100 percent formalization is not an overnight event. However, its programme targets a maximum of 18 months to attain this ideal goal which will be first in the world,” GMAZ said.
GMAZ said the Mines and Minerals Act does not recognise small miners, who pay the same fees, levies and charges as the large scale producers. The small miners have proposed differential charges and legislation.
“We feel that fees, levies and charges should not be or appear to be punitive, but must be supportive of the goal to eradicate illegal or informal activities,” said GMAZ. “Prospecting licences for small scale miners should be lowered to US$100 to facilitate regularisation of mining locations that have not been pegged.”
The miners explosives licence fees should be reduced to US$200 while special grant application fees of US$5000 should ideally be around US$1000. They said Environmental Management Agency fee should be reduced to between 5 and 10 percent for small scale miners who currently pay a similar rate as big producers.
GMAZ also expressed reservations about the US$6 000 annual licence fees demanded by Rural District Councils and that a smaller levy should be charged as mining companies have an obligation to contribute to infrastructure development. It proposed a small percentage of the production such as 0,5 percent levy.
The association said GMAZ requires its members to comply with National Social Security Authority, National Employment Council, Zimbabwe Manpower Development Fund and Zimbabwe Revenue Authority requirements.
It also appealed to the Government ministries and agencies to avoid and eliminate bureaucratic bungling. “For example, Special Grant applications, despite the high fees charged, are taking inordinately long to be finalised. In the spirit of Zim-Asset, GMAZ would like to collaborate with Government departments to overcome inefficiencies some of which might be induced by scant resources,” GMAZ said.
“The sum total of compliance costs, therefore, becomes prohibitively high and unattractive to small scale miners in the absence of collective action to revise levies, charges, fees and penalties,” GMAZ said. “We also stress that legislation should be conducive to doing business and should aim at activity by working together with Government in crafting or improving legislation that is ultimately supportive of small miners.”
The gold miners said they welcomed the US$100 million earmarked for the small miners saying the GMAZ required its members to observe prudent financial management where loans are amortised in agreed periods.
“The association believes that disbursements from the US$100 million loan facility should be purely on merit with 100 percent loan recovery from the beneficiaries,” GMAZ said.
To mitigate risk, the small scale gold miners association has adopted a number of initiatives including engaging the Somanja Economic Development Institute for systems implementation on business and economic patterns, company systems, practical company roll out and strategic deal structuring for investments.