Musukutwa told a parliamentary thematic committee on indigenisation and empowerment yesterday that the US$100 000 charged for Exclusive Prospective Orders (EPO) was inhibiting new investment in mining, especially undercapitalised local miners.
An EPO is a licence granted to potential investors to prospect for minerals in a particular area before they are authorised to mine under a Special Grant.
Government levies a further US$100 000 for Special Grants (SG) on strategic and energy minerals such as coal, methane and diamonds. President Robert Mugabe is the only one allowed by law to allocate SGs, said Musukutwa. He said discussions with the Finance ministry were still on.
“We would want to revise that (fees charged on EPOs) and come up with a lesser fee. Today (yesterday) we were discussing with the ministry of finance on that matter. We feel that it is not fair to charge that much for someone who is looking for a mineral,” Musukutwa told the committee.
Musukutwa said liquidity shortages and frequent power outages were slowing the mining sector’s recovery.
“We don’t expect more royalties from the mines which are currently creeping and operating at 30% due to power outages and liquidity problems,” said Musukutwa. He was responding to questions from committee members on why Finance minister Tendai Biti has been
attacking mining firms for not contributing sufficiently to economic growth.
Acting committee chairman Senator Morgan Komichi commended the move to lobby for a reduction of EPO fees as “proactive”. He said this would improve investment in a sector that sharply declined at the height of hyperinflation.
“With the current fee structure, an investor risks losing out if they fail to recoup capital,” Komichi said.
“Banks have no capacity to give such money and this would leave the sector as a preserve of the elite who are not many in the country. The existing levy goes against a broad-based empowerment policy,” said Komichi.
On indigenisation, Musukutwa said his ministry was still discussing with stakeholders with the view of reviewing the empowerment modus operandi. Mining companies are challenging the current 51/49% in favour of local Zimbabweans saying such a structure would scare away investors. The Chamber of Mines has proposed to sell 15% of their stakes to locals as their contribution to indigenisation.