Zimbabwe's billion dollar mining sector wants to wholly retain foreign currency receipts to be able to pay royalties, taxes and other levies which the authorities want them paid fully in United States dollars in a fresh headache for the forex starved economy.
The mining sector contributes over 60% of Zimbabwe's export earnings which is used to oil the economy through the importation of essential raw materials for production and drugs.
At the moment, large scale miners retain 70% of their export proceeds which has to be liquidated in 60 days.
The balance is paid in local currency at the prevailing auction rate. Local miners, especially large scale miners, who were grappling with tax issues and levies which were too high, now want taxes to be pegged at the same level with foreign retention levels for them to continue operating sustainably.
Mining experts said the large scale miners were riled by government's move in July to allow small scale miners to retain of 100% of their earnings despite the fact that some players barely pay taxes and levies.
Chamber of Mines of Zimbabwe CEO Isaac Kwesu told Business Times that the government should come up with a foreign exchange retention framework that aligns with the statutory obligations.
Kwesu said submissions have been forwarded to the ministry of Finance for consideration in the 2021 National Budget.
"We want the government to pay us 100% in forex to meet our statutory obligations.
For now, we can't continue with the 70% forex retention threshold when the government is demanding 100% of the statutory mining requirements to be paid in United States dollars as that money leaves the miners in the red," Kwesu said, adding that the 70% was applicable when all the statutory obligations are paid at that level.
He warned the capital intensive sector would default in paying taxes as they would not have the capacity to do so.
"Treasury is demanding 100% irrespective of the fact that the miner got 70% forex payment, ZESA is also demanding 100%, the Environmental Management Agency is also demanding 100% forex payment and the Rural District Council is also demanding the 100% so the issue is that 70% is inadequate not that we don't want to pay," Kwesu said.
He said production levels across the industry would improve if authorities raise the retention levels.
In July 2020, the government reviewed forex retention to 70% from 55% implemented last year to curb massive mineral leakages amid indications over 30 tonnes of the yellow was smuggled last year.
Gold Miners Association of Zimbabwe chief executive Irvine Chinyenze told Business Times the mining sector taxes were a hindrance to attracting investment in the industry.
"In order to attract big investment in the mining sector we should totally do away with some taxes and levies and when taxing, government should tally forex retention level with the taxes if not lower them," Chinyenze said.
In his 2021 pre-Budget Strategy paper, Finance and Economic Development minister Mthuli Ncube said mining and quarrying would grow by 11% next year on investment in the sector and firming international mineral prices.
The call by miners to wholly retain their proceeds comes at a time cumulative gold deliveries up to September slumped by 28% to 14.76 tonnes compared to 20.64 tonnes delivered during the first nine months of 2019 amid fears of smuggling of the precious metal on delayed payment.
Kwesu said the delay in payments disrupted production cycle as some payments could take two weeks and others up to eight weeks.
"This means you will have two months without payment and you cannot produce at the same scale when the working capital is not yet available.
Miners were going to banks to seek for bridging finance which had also been difficult to access," he said.
"Working without payments was one of the major issues of a subdued performance of the sector.
Small scale miners need money instantly as they do hand to mouth to operate so any delay in payment will result in catastrophe for the miners and the sector.
"Government is trying to sort out the delays but they continue to occur and this means delayed payment is also a delay in production."
In June, resources group RioZim stopped gold mining operations due to a failure to meet operating costs.
The firm said the then fixed exchange of 1:25 was unviable for the 30% receipts which the miner got in local currency as it was unable to meet its operational costs.
The company said it was owed US$2.4m and ZWL$65.5m by Fidelity Printers and Refiners.
President Emmerson Mnangagwa's administration is targeting US$12bn export receipts for the mining sector by 2023 anchored on effectively pursuing value addition and beneficiation of local minerals such as lithium, nickel, graphite, gold, platinum and chrome. Gold is expected to lead the charge with US$4bn.
Ncube said attainment of the target would entail increased investment in the exploration, extraction, value addition and beneficiation across all minerals. He said the government would prioritise finalising amendments to the Mines and Minerals Act expected to bring a market based conducive investment climate that provides the stability, consistency, competitiveness and transparency in the sector.
Ncube said the amendment should pave way for the formulation of mineral policies and facilitate the resuscitation of strategic closed mines.
Info News
Artificial Intelligence and Automation Are Reshaping Global Industries
Artificial intelligence and automation technologies are transforming industries across the world at an unprecedented pace. Businesses are using AI-powered systems to automate repetitive tasks, analyze data faster, improve customer service, and increase operational efficiency. Industries including healthcare, banking, transportation, agriculture, and retail are all experiencing major technological changes driven by AI innovation.
rnrn
AI-powered chatbots, recommendation systems, fraud detection software, and predictive analytics tools are becoming common across digital platforms. Businesses are increasingly investing in machine learning technology to improve decision-making and reduce operating costs. In healthcare, AI systems are assisting doctors with diagnoses, patient monitoring, and medical research.
rnrn
Automation is also changing the global workforce by reducing the need for some traditional jobs while creating demand for new digital skills. Technology experts encourage workers to focus on cybersecurity, software development, data analysis, and digital marketing skills to remain competitive in evolving job markets.
rnrn
Despite concerns about job displacement and privacy risks, experts believe artificial intelligence will continue driving economic growth and technological innovation. Governments and businesses are expected to invest heavily in digital infrastructure and workforce training programs over the next decade.
rn
SEO Meta Title Debt Consolidation Loans: Pros, Cons, and Comparison Tips
Debt consolidation can sound like an easy solution: combine several debts into one payment and possibly lower the interest rate. For some borrowers, that can be helpful. For others, it only moves debt around while the balance continues to grow. The difference depends on the loan terms, fees, spending habits, income stability, and payoff discipline.
A debt consolidation loan is usually a personal loan used to pay off credit cards, medical bills, store cards, payday loans, or other unsecured debts. After the old balances are paid, the borrower makes one fixed monthly payment to the new lender. The main appeal is simplicity. One due date, one payment, and one payoff timeline can make budgeting easier.
The biggest potential benefit is a lower interest rate. Credit cards often charge variable rates that can rise over time. A fixed-rate personal loan may offer a predictable payment and a defined end date. If the new loan has a lower rate and you avoid new debt, consolidation can reduce interest costs and speed up payoff.
However, the monthly payment is not the only number to review. A longer repayment term can lower the monthly payment while increasing total interest paid. For example, stretching debt over several years may feel easier each month but cost more overall. Always compare total repayment, not just the payment amount.
Fees matter too. Some lenders charge origination fees, late fees, returned payment fees, or prepayment penalties. An origination fee may be deducted from the loan amount, which means you receive less money than expected. Compare the annual percentage rate because it includes certain finance charges and gives a better apples-to-apples view than the interest rate alone.
Credit score impact can go in different directions. Applying for a loan may create a hard inquiry. Opening a new account can reduce the average age of credit. However, paying down credit card balances may improve credit utilization, which can help some borrowers over time. The biggest factor remains making on-time payments.
The main risk is running up the old credit cards again. If you consolidate balances and continue using cards without a budget, you may end up with the consolidation loan plus new credit card debt. Before taking a loan, create a spending plan and decide whether to close cards, lower limits, or keep cards open but unused.
Not everyone qualifies for a low rate. Lenders may review credit score, income, debt-to-income ratio, employment history, payment history, and existing balances. Borrowers with stronger credit often receive better terms. If the offers are high-interest, consolidation may not save money.
Alternatives include a balance transfer credit card, nonprofit credit counseling, a debt management plan, negotiating with creditors, budgeting changes, side income, or a structured debt snowball or debt avalanche method. Balance transfers may offer promotional rates, but fees and deadlines matter. Missing the promotional payoff date can lead to higher interest.
Before choosing any offer, write down every debt: creditor, balance, interest rate, minimum payment, due date, and payoff priority. Then compare three scenarios: keeping current payments, using a consolidation loan, and using another strategy. A simple spreadsheet can reveal whether consolidation truly saves money.
Ask lenders these questions: Is the rate fixed or variable? What is the APR? Are there origination fees? Is there a prepayment penalty? What is the total repayment amount? When are funds sent? Can the lender pay creditors directly? What happens if I miss a payment? Are there hardship options?
Debt consolidation works best when it is part of a larger debt payoff plan. The loan should create a clear path out of debt, not a temporary break from the pressure. If the payment fits the budget, the rate is lower, and the borrower stops adding new balances, consolidation can be a useful tool. If not, it may delay the real problem.
