The Reserve Bank of Zimbabwe (RBZ) has made an announcement concerning the new measures to implement a policy that directs miners to pay 50% of royalties due to the state in the form of minerals. Last year in October the RBZ announced that royalties that were due to the RBZ would be partly paid in the form of minerals. Miners are required to pay this royalty in the form of the mineral that they are mining. These measures came into effect starting 1 October 2022
The rationale behind this policy change is to allow the RBZ to collect, hold, and manage reserve assets for the benefit of the Republic of Zimbabwe. According to the RBZ, all in-kind royalties should be delivered to the RBZ, and the collection, maintenance, and subsequent marketing of these assets will be subject to industry practices and regulatory requirements.
The RBZ has said that they will be responsible for facilitating the collection or delivery of the in-kind portion of royalties. The central bank also revealed that miners will only be required to will have to send minerals directly to the RBZ while cash payments will be receipted by the Zimbabwe Revenue Authority (ZIMRA). In their public notice, the RBZ also made reiterated the fact that the law allows them to determine which minerals or metals to keep, hold, or maintain from time to time, based on prevailing local and international economic conditions and commodity pricing trends.
The RBZ also claimed that the move to demand payment in kind instead of cash is in line with the mandate of the RBZ to hold, maintain, and preserve the value of reserve assets. In cases where the RBZ determines that it is not economical or possible to keep a particular mineral or metal, the bank said arrangements will be made to convert the in-kind portion of royalties to cash. The cash will then be used to purchase another specified mineral or metal of equivalent value, which will be kept as a reserve asset.
The announcement of this policy change has been met with mixed reactions from the mining industry and other stakeholders. Some have praised the move as a way to enhance the value of Zimbabwe’s reserve assets, while others have expressed concerns about the potential impact on the mining industry and the country’s economy.
It remains to be seen how this policy change will be implemented and what the long-term effects will be. The RBZ has stated that it will closely monitor local and international economic conditions and commodity pricing trends to ensure that the value of the reserve assets is preserved or enhanced.
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