Companies mining specified minerals are now required to pay 50 percent of their royalties in kind with effect from October 1, 2022, the Reserve Bank of Zimbabwe (RBZ) announced in a statement released yesterday.
In October 2022, the Government announced a new mining royalties system requiring companies mining gold, diamonds, lithium, platinum group metals (PGMs) and any other precious stone or valuable metal specified by RBZ to pay part of their royalties in refined metal rather than cash.
"The bank wishes to advise miners or mining houses, relevant stakeholders and the public of the following arrangements to implement the legislative changes:
"With effect from October 1, 2022, miners of gold, diamonds, platinum and lithium (and any other precious stone or precious or valuable metal specified by the bank by notice in a statutory instrument, shall be enjoined to pay 50 percent of royalties due to the State in kind, that is, in the form of the mineral concerned," said RBZ in a public notice yesterday.
This follows amendments to Finance Act (Chapter 23:04 and the RBZ Act (Chapter 22:15), respectively providing for the collection of 50 percent of royalties in kind - in the form of the mineral concerned, and the Central Bank to maintain, over and above, gold, reserve assets in the form of diamonds, platinum and lithium (and any other precious stone or precious or valuable metal specified by the bank by notice in a statutory instrument) in a form and at a purity or of a quality or of a specified kind.
The RBZ said the rationale for the legislative changes was to enable the monetary authority to collect, hold and manage reserve assets for the benefit of the country and thus all in-kind royalties shall be delivered to the Apex bank.
It said the delivery of the in-kind royalties, holding, maintenance and subsequent marketing of the same, shall be subject to and in compliance with applicable practices and regulatory requirements.
Data from the Zimbabwe Revenue Authority (Zimra) shows that in 2021, mineral royalties accounted for 2,8 percent of the country's tax revenue.
"It shall be the responsibility of the bank to facilitate the collection or delivery of the in-kind portion of the royalties and for the avoidance of doubt, only the cash portion shall be collected by Zimra.
"In order to ensure that the value of the Reserve assets held is preserved and enhanced, the bank shall have the discretion to determine which prescribed mineral or metal to keep, hold or maintain from time to time, as dictated by prevailing local and international economic condition and commodity pray trends," said the monetary authority.
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In line with its mandate to hold, maintain and preserve the value of the reserve assets, where the bank considers and determines that it is not economical or possible to keep any specified mineral or metal, RBZ shall facilitate and make arrangements that the portion of the royalty payable in kind is converted to cash.
The cash will then be utilised by the central bank to buy another specified mineral or metal, for the equivalent value that it will keep as a reserve asset.
The latest legislative changes come amid recent concerns by the Chamber of Mines of Zimbabwe that mining firms were awaiting guidance on how they should pay the royalties. Chamber of Mines chief executive officer Mr Isaac Kwesu would not be reached for comment by the time of going to print yesterday.
