Doing Business in Zimbabwe – The Mining Industry

⛏️ Doing Business in Zimbabwe – The Mining Industry: A Comprehensive Overview

The mining sector is a cornerstone of the Zimbabwean economy, governed by a complex framework of legislation primarily rooted in the Mines and Minerals Act [Chapter 21:05].¹ Investors interested in this sector must navigate these regulations, which govern everything from mineral rights acquisition to marketing and royalty payments.

I. Regulatory Framework and Industry Bodies

The mining industry falls under the jurisdiction of the Ministry of Mines and Mining Development.

A. Governing Legislation

While the Mines and Minerals Act is the principal statute, the industry is subject to several other pertinent laws:

• Mineral Marketing Corporation of Zimbabwe (MMCZ) Act: Regulates the marketing of most minerals (excluding gold).

• Gold Trade Act: Specifically addresses the regulation and trade of gold.

• Precious Stones Trade Act: Governs the trade of precious stones.

• Base Minerals Export Control Act: Controls the export of strategic base minerals.

The long-pending Mines and Minerals Amendment Bill, aimed at modernising the sector, has yet to be enacted, meaning the current framework remains largely dependent on the existing Act.

B. Key Administrative and Representative Bodies

• Mining Affairs Board: Established by the Mines and Minerals Act, this body oversees the administrative aspects of the Act and reviews applications for concessions like Exclusive Prospecting Orders (EPOs).

• Chamber of Mines of Zimbabwe: The dominant representative body for the mining industry, established by an Act of Parliament.

• Zimbabwe Mining Development Corporation (ZMDC): A government-owned parastatal responsible for carrying out mining operations and development on behalf of the state.

C. Mineral Rights Ownership

A fundamental principle of Zimbabwean mining law is that the dominium in and the right of searching and mining for and disposing of all minerals, mineral oils, and natural gases is vested in the President. This paramount right overrides any private land rights where such minerals may be located.

II. Acquiring and Registering Mining Rights

The process of securing mining rights typically begins with prospecting and culminates in the registration of a mining claim or the granting of a special concession.

A. Prospecting and Licensing

1. Approved Prospector: Prospecting can only be undertaken by an Approved Prospector, who must register with the Mining Commissioner. Foreign prospectors require prior approval from the Secretary of Mines.

2. Prospecting Licence: An approved prospector obtains a licence, typically valid for two years. The licence cannot be sold, traded, or transferred.

B. Pegging a Claim

• Prospecting Notice: Upon identifying an area, a prospector must post a prospecting notice, which grants exclusive prospecting rights over that area for 31 days.

• Discovery and Pegging: If minerals are discovered:

  • The discovery point is marked by a “DP” peg

  • A registration notice must be posted before the 31-day period expires.

  • Detailed specifications for pegging claims/mineral blocks are outlined in Section 43 of the Act.

• Registration: The claim must be registered with the Mining Commissioner within 31 days of posting the registration notice to be allocated a unique claim number and receive a Certificate of Registration. Failure to register within this period results in deemed abandonment.

C. Land Limitations

The Act places strict limits on prospecting near existing structures (housing, dips) and in areas cleared for agriculture, unless unused for the past two years. Disputes between landowners and prospectors are resolved in the Administrative Court.

III. Concessions and Leases

For larger, more sophisticated operations, the Act provides for Exclusive Prospecting Reservations (EPOs) and various forms of Mining Leases.

A. Exclusive Prospecting Reservations (EPOs)

An EPO grants exclusive prospecting rights over a defined, often large, area for a specified period (maximum three years, renewable for up to three more years).

• Formal Application: Application is made to the Mining Affairs Board. Requirements include detailed financial information, a work programme, corporate structure details, and payment of a fee (e.g., US$100 per month for every hectare).

• Maximum Area: EPO sizes are capped based on the mineral:

  • Coal, mineral oils, natural gases: 130,000 hectares.

  • Precious stones (excluding diamonds): 2,600 hectares.

  • Other minerals: 20,000 hectares.

• Approvals: The Board recommends, and the application requires final approval from the President.¹¹

   

B. Mining Leases

• Mining Lease (ML): Issued to the holder of registered claims, granting exclusive rights of mining within the vertical limits of the lease area.¹² This allows for reserve reservation and future expansion.

• Special Mining Lease (SML): Reserved for major investments. An SML is applicable when:

  • Investment exceeds US$100 million, primarily in foreign currency.

  • Output is intended principally for export.

  • Benefits: SML holders historically enjoyed a lower standard corporate tax rate of 15% and specific foreign currency operational benefits, though the relevance of these benefits needs careful consideration in the current economic environment (as additional profits tax may apply). SMLs are typically granted for up to 25 years, renewable for up to 10-year periods.

C. Special Grants

Special Grants are issued by the Secretary to carry out prospecting or mining operations in areas reserved against normal pegging. Special Grants are mandatory for minerals like coal, mineral oils, natural gases, and nuclear energy source material, and require Presidential approval.

IV. Ongoing Obligations and Mineral Marketing

A. Claim Preservation and Forfeiture

Registered claims must be preserved through the process of obtaining inspection certificates, which verify that development work has been carried out. Claims can also be preserved by paying a prescribed fee if development is deemed unnecessary. Failure to comply leads to automatic forfeiture.

B. Royalties and Beneficiation

Miners pay a Royalty to the Zimbabwe Revenue Authority (ZIMRA) on all disposed minerals based on the gross fair market value.

• Rebates and Remissions: A full rebate applies for minerals used wholly within Zimbabwe. A rebate is also granted for minerals disposed of to or treated by an approved beneficiation plant to encourage local value addition.

C. Marketing of Minerals

• Non-Gold Minerals: The Mineral Marketing Corporation of Zimbabwe (MMCZ) regulates the marketing of most minerals. Sales are generally required to be made to or under the authority of the MMCZ, which charges a standard commission of  0.875% of the gross invoice value.

• Gold Sales: The marketing of gold is regulated by the Reserve Bank of Zimbabwe (RBZ). Currently, the RBZ allows producers to market their gold internationally directly under specific guidelines.