Govt, miners must strike deal

HARARE - The recent move by government to effect a 15 percent Value Added Tax on raw platinum exports will not only put a dent on reviving the mining sector but is also likely to see many mining companies either scaling down operations or completely closing shop.

Already, platinum miners Aquarius and Impala Holdings have indicated that the new tax regime will significantly impact on their operations and are planning to halt some of their expansion programmes.

As such, it is crucial for both government and platinum companies to hold discussions over the issue so that they can come up with lasting solutions.

At the moment, the country stands to lose more if these planned projects are halted as no new jobs would be created this year at a time when the unemployment rate is nearing 90 percent.

For instance Mimosa Platinum mine is due to make a decision on a $70 million expansion this year, with the mine planning to add 70 000 ounces of platinum group metals a year to existing output of about 220 000 ounces.

Now if the expansion doesn’t go ahead due to the additional 15 percent tax, not only will 200 jobs be lost, but shareholders will also lose

$183 million in potential revenue over the three years while the government will forgo $18 million in income tax.

This shows that there is an urgent need for dialogue between government and miners so that a solution can be found to this impasse which is threatening to destroy the mining sector in particular and the economy in general.

We would, therefore, like to commend the stance taken by lobby group, Buy Zimbabwe, of bringing both aggrieved parties to the table. We feel that this move will go a long way in addressing some of the structural problems affecting the economy.

The country’s economy is currently at crossroads and badly in need of fresh capital injections but our major worry is the issue of policy inconsistency in the country as this confuses investors and the environment.

History and research has shown that policy inconsistency is detrimental to the country’s investment climate as it adds to confusion on the country’s ability to attract investment.

Besides bringing quality content products to our readers, we also stand for wealth and job creation in the country.

As such, we call upon both government and mining houses to put the economy and people of Zimbabwe first before making decisions that are likely to jeopardise the envisaged gains from the policy intent.

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