Biti Criticises New Rule That Compels Miners To Pay Royalties In Minerals11 months ago
Former Finance Minister Tendai Biti has criticised the government’s new policy which compels miners to pay half of their royalties in minerals.
President Emmerson Mnangagwa recently said the new policy will start this month and it will enable the country to build reserves of valuable minerals.
Writing in his weekly column published in The Sunday Mail newspaper, Mnangagwa said Zimbabwe seeks to build a national reserve of valuable minerals that include gold, diamond, platinum and lithium.
Responding to the announcement, Biti said changes in the royalties regime can only be done through an Act of Parliament.
He also argued that it doesn’t make sense to build reserves of lithium and platinum. Biti said the government should instead establish a Sovereign Wealth Fund (SWF). He said:
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The regime’s directives that half of the mining royalties must be paid as processed ore with effect from October is one of those ill-thought zany ideas that reflect vacuousness & cluelessness.
For starters, no changes in the royalties regime can be made without changes in the law & parliament’s involvement & approval.
Secondly whilst a case can be made for building gold reserves, it is absolute insanity to keep reserves of chrome, lithium or platinum. Why and what for?
Minerals are not liquid & have fluid values determined by international commodity markets. Determining value for royalty purposes will always be a challenge.
Particularly for platinum which has at least 6 derivative metals including rhodium, nickel, gold & silver.
Only a Sovereign Wealth Fund insulated against demands for recurrent obligations can act as a reserve of mineral wealth to be used & enjoyed by future generations.
Successful models of SWF, the biggest & most successful being Norway’s exists. The regime has failed to build its own SWF.