FORMER Finance minister Tendai Biti says Zimbabwe is losing billions of United States dollars due to opaque mining policies which favour companies under-declaring proceeds from exploiting the country’s resources.
Biti said mining companies were capitalising on the government’s dodgy policies to make a fortune at the expense of the country.
Biti accused Finance minister Mthuli Ncube of being captured by mining interests amid fears the country was losing a lot as bigger players in the industry are not stating the true value of minerals they are extracting. He was debating the Finance Bill that went through its second reading this week.
“If you are a platinum miner, you are effectively a lithium miner, palladium miner, nickel miner, gold miner, rhodium miner and a silver miner. What these mining houses are declaring, they are just declaring one mineral. Zimbabwe is being prejudiced,” Biti said.
“As a result, you have this anomaly that platinum houses in Zimbabwe, with the key culprits being Mimosa and Unki, are exporting raw platinum out of Zimbabwe. When they do so, instead of declaring the processed by-products of platinum ore, they are only declaring platinum.
“If you look at the global trends, the price of the six or so PGMs [platinum-group metals] — lithium is actually selling more. There is a commodity boom yet they are understating what they are getting from lithium. They will tell us what they are getting from platinum is perhaps gold, lithium and rhodium,” he added.
Biti said it was tragic that Zimbabwe continues to export raw materials at a time the country could be doing more to maximise on natural resources.
“If you were to wake Cecil John Rhodes right now, he will not get lost by the political economy because we are still exporting raw wealth as we were doing in 1896,” Biti said.
“All the minerals which we are producing are exported yet the minister, in his wisdom or more appropriately in his lack of wisdom, he is proposing that royalty should be paid 50% in Zimbabwe dollars and 50% in foreign currency, giving them a further incentive for stealing the much-needed resources of this economy.
“There is no objective reason or rational basis of why miners who are earning in US dollars should then be given an opportunity of paying their taxes in local currency. It does not make sense at all unless the minister is captured by mining interests.
“If you take Zimplats, last week in your absence I spoke, in fact the minister spoke, about 26 million ounces of platinum that are on the 104 square kilometres of land in Selous that were hypothecated and pledged to the Chinese, given as mortgage bond as a result of a loan of US$200 million that we borrowed from China in 2006.”
Biti said Zimplats was sitting on platinum reserves of 176 million tonnes, adding that the total, at whatever price, was running into billions of dollars.
“These are already rich companies in terms of what they have underground. So, to continue giving them tax incentives when they are actually not properly accounting to Zimbabwe because of their continued refusal to construct a refinery in Zimbabwe which will enable Zimbabwe to know what it is getting from the gold that comes from platinum, the lithium that comes from platinum, the palladium that comes from platinum, the rhodium that comes from platinum and the silver that comes from platinum is simply not good enough.”
Biti accused Ncube of “trying to squeeze the water from rocks” through his economic pronouncements.
“So if you look persistently throughout the Finance Bill, there are increases in tax measures in an economy where the majority are unemployed and the majority are living in extreme poverty,” Biti said.
Latest statistics show that over 60% of Zimbabweans are living in extreme poverty. Biti said the Zimbabwean economy was prone to recessions and depressions, adding that it was a concern that mining taxation as proposed by Ncube was evident of a captured minister.
“I believe that if the minister is not captured by mining interests, then he is certainly a slave to mining interests,” Biti said.
“The first thing I find of major concern is the proposal to suspend by 12 months, the obligation of platinum houses to pay VAT [Value-Added Tax] on unbeneficiated platinum that is coming out of Zimbabwe.”
“Ostensibly in his explanation, the reason is to give tax incentives to mining houses so that they can build a refinery in Zimbabwe. Zimplats has been in this country for a period of 20 years and they have not built a refinery,” the Harare East MP said. Norton MP Temba Mliswa also raised concern over the alleged capture of resources by mining interests, saying Zimbabwe was not benefitting much.
“There has been no beneficiation and all the facilities are here. It seems as if, and I will not lie, when the First Republic was there, they seem to have respected or were scared of the former RG Mugabe the late, but with the current dispensation, whites are having a party and Chinese are having a party.”
“We are busy worried about a doctor in South Africa telling a Zimbabwean that you must pay when they have been treated instead of us saying we are citizens in our country, why are you not fighting the Chinese on our resources? What was the struggle for? You are busy making noise but let us make noise where the money is. Why are the Chinese not giving us anything?”