Zimbabwe’s mining sector is recognized as a key player on the global stage, due to its rich deposits of valuable minerals, including gold, diamonds, platinum group metals (PGMs), lithium, chrome, coal and natural gas. Since 2018, Zimbabwe has undertaken significant initiatives to unlock the full potential of its mining industry, focusing on enhancing the regulatory environment to attract foreign investment.
This article provides an overview of Zimbabwe’s mining regulatory framework, highlights recent changes, and explores emerging investment opportunities.
LEGAL FRAMEWORK
In Zimbabwe, mineral rights are vested in the President and administered through the Ministry of Mines and Mining Development. According to Zimbabwean law, any individual over the age of 18 who is a permanent resident or any company registered in Zimbabwe can acquire mining rights. Unlike in some other jurisdictions, mining entities in Zimbabwe can be 100% privately owned by investors. This structure allows both local and foreign entities to fully participate in the mining sector. The legal framework governing mining activities in the country is primarily set out in several key pieces of legislation, along with relevant regulations and policies.
| STATUTES | REGULATIONS |
| Mines and Minerals Act Chapter 21:05, Minerals Marketing Corporation of Zimbabwe Act Chapter 21:04, Finance Act Chapter 23:04, Income Tax Act Chapter 23:06, Labour Act Chapter 28:01, Gold Trade Act 21:03, Precious Stones Trade Act Chapter 21:06, Zimbabwe Mining and Development Corporation Act Chapter 21:08, Base Minerals Export Control Act 21:01, Copper Control Act Chapter 14:06, Environmental Management Act Chapter 20:27, Explosives Act Chapter 10:08 | Mining (General) Regulations, Mining (Management and Safety) Regulations, Mining Industry Pension Fund Statutory Instrument 14 of 2016, Mining (Health and Sanitation) Regulations, Mining (Custom Milling Plants) Regulations, Collective Bargaining Agreement: Mining Industry Statutory Instrument 152 of 1990, Environmental Management (Control of Alluvial Mining) Regulations Statutory Instrument 92 of 2014 |
- The Mines and Minerals Act (Chapter 21:05): This is the primary legislation that regulates mining activities in Zimbabwe. It governs the exploration, mining, and processing of minerals, outlining the rights and obligations of miners and the government.
- The Precious Stones Trade Act: This Act specifically regulates the trade and mining of precious stones, including diamonds and emeralds.
- Environmental Management Act: This legislation ensures that mining operations adhere to environmental protection standards, promoting sustainable mining practices.
2. Mining Rights and Licensing
- Prospecting and Mining Licenses: To engage in mining activities, companies must apply for and obtain the appropriate licenses. This includes a prospecting license for exploration and a mining lease for extraction.
- Mineral Rights: In Zimbabwe, mineral rights are separate from land rights. Holding a land title does not automatically confer mineral rights, which must be obtained through specific licensing processes.
3. Investment and Ownership
- The Indigenisation and Economic Empowerment Act, which previously required 51% local ownership for foreign-owned mining operations, was modified to allow private ownership without mandatory indigenous stakes in the majority of mining operations. As of the Finance Act No. 2 (2020), there are no minerals classified under indigenisation requirements, allowing foreign investors greater flexibility and ease of entry into Zimbabwe’s mining sector.
- Joint Ventures: The law encourages partnerships between foreign and local companies, especially in large-scale mining projects.
4. Regulatory Bodies
- Ministry of Mines and Mining Development: This government body oversees the mining sector, issuing licenses, monitoring compliance, and enforcing regulations.
5. Environmental and Social Considerations
- Mining operations must comply with environmental regulations to minimize their impact on land, water, and biodiversity. Environmental impact assessments (EIAs) are mandatory before commencing mining activities.
- Social responsibility initiatives are increasingly important, with mining companies expected to engage with local communities and address social impacts resulting from their operations.
Income Tax Act: Governs taxes related to mining operations, including income tax, royalties, and specific industry-related deductions.
Environmental Management Act: Mandates an Environmental Impact Assessment (EIA) for mining projects, requiring companies to assess environmental, social, and economic impacts.
Labour Act: Covers employee rights, safety standards, and work conditions, ensuring ethical labour practices.
KEY REGULATORS
Some key mining Regulatory Authorities include:
Several key institutions in Zimbabwe support mining investment by providing guidance, regulatory oversight, and technical assistance:
(a) Ministry of Mines and Mining Development: Oversees the sector and issues mineral rights, licenses, and other critical approvals.
(b) Zimbabwe Investment and Development Agency (ZIDA): ZIDA was established to streamline investment processes. It helps investors coordinate necessary registrations, permits, and clearances to ensure a smooth entry into Zimbabwe’s mining sector. Foreign investors are required to set up a locally registered company and secure an Investment License from ZIDA.
(c) Zimbabwe Geological Survey (ZGS): Offers extensive geological data, mapping, and technical support for exploration activities, helping investors make informed decisions.
(d) Zimbabwe Chamber of Mines: Provides a forum for industry collaboration, advocacy, and support, representing mining entities’ interests.
TYPES OF MINING RIGHTS
The following constitute the main types of mining rights available in Zimbabwe.
| Mode of Acquisition | Description | Description |
| Exclusive Prospecting Orders | Can be acquired for all minerals except coal. The standard EPO can be in respect of 65 000ha or any other specified area, including access to reserved areas. | An application for an EPO is submitted to the Secretary of the Mining Affairs Board (MAB). The authorising authority for an EPO is the President. The licence is valid for three (3) years. An EPO is a transferrable right; the transfer request must be made to the MAB and approved by the President. |
| Ordinary or Special prospecting rights to mining rights | Can be acquired in respect of any mineral. Area specifications can be 10ha for precious metals/ stones and 25ha for base metals. | A Prospecting license is acquired from the Mining Commissioner and the holder of license eventually acquires mining rights after fulfilling all required processes of pegging, registration and application for mining rights. |
| Mining lease, special mining lease or special grant | A mining lease can be issued for all categories of minerals and is issued for an amalgamation of contiguous locations. A special mining lease can be issued for all categories of minerals and is issued for any defined area as specified in the lease. A Special Grant (SG) can be issued for any defined area or specifically for coal, mineral oils and natural gas. Area specifications under a Grant can be 200 000ha for coal and 100 000ha for Coal Bed Methane and Natural Gas. | Mining lease – The holder of registered blocks can apply for mining rights. Special lease– holder of mining block applies for mining rights for a development wholly or mainly in foreign currency with product mainly primed for export. The Mining Affairs Board considers applications for special leases. Special Grant – The Permanent Secretary of Mines/ the President can issue any person a special grant to mine in accordance with terms specified in the SG and can include rights over a reserved area. |
| Transfers | This is a secondary mode of rights acquisition where the owner of a registered mining rights holder can transfer such rights to another. | Entails the sale of a registered mining location or interest therein to another person. The sale Agreement should be lodged with the Mining Commissioner. |
| Tributes | This is a Secondary mode of rights acquisition where one can acquire rights to mine from the owner of a mining location. | The holder of a mining location can issue a tribute by selling or alienating any interest to another person. The agreement recorded in a Notarial Deed must be lodged with the Mining Commissioner. |
| Options | This is a Secondary mode of rights acquisition | A Potential buyer can be issued options to purchase or deal with a mining location by the holder of a mining location. If the Mining Commissioner approves, the option will be recorded in a notarial deed and registered. |
ROYALTIES & TAXES
The Finance Act of 2023 brought about tax and royalty reforms, focusing on ensuring that the government receives fair revenue from resource extraction:
| Mineral | Royalty (% of Gross Mineral Value) |
| Diamonds | 10% |
| Other Precious stones | 10% |
| Platinum | 2.5% |
| Gold – Other Miners | 5% |
| Gold – Small Scale Miners | 1% (for the first 0.5kgs of gold delivered to a holder of a gold dealing licence in a calendar month). 1% (if the gold is delivered by a holder of a gold buying agency permit to a holder of a gold dealing licence in a calendar month) 2% (if the gold delivered to a holder of a gold dealing licence in a calendar month exceeds 0.5kgs) |
| Other Precious Metals | 4% |
| Base Metals | 2% |
| Industrial Metals | 2% |
| Coalbed Methane | 2% |
| Coal | 1% |
| Black Granite | 2% |
| Other cut and uncut dimensional stones | 2% |
GENERAL TAX/ REGULATORY OVERVIEW
As with any mining jurisdiction, there are several taxes which are applicable to mining entities. Some of the key taxes or regulatory costs include:
| TAX/ REGULATORY | RATE | |
| Income tax | 15% for Special Mining Lease Holders 24% for companies or trusts derived from mining operations. | |
| Additional Profit Tax | This is an additional tax to income tax which is only applicable to Special Mining Lease Holders after attaining a formula based on the level of profitability. The tax is levied as a consequence of the relaxed fiscal incentives that Special Mining Lease holders enjoy. | |
| Transfer Pricing | https://www.zimra.co.zw/transfer-pricing-practice-notes | |
| Non-Residents Withholding Tax | • 15% on fees for services of a technical, managerial, administrative or consultative nature paid to a non-resident. • 15% on remittances, and • 10-15% on dividends depending on whether the company paying out the dividend is listed on the Zimbabwe Stock Exchange or not. | |
| . Pay As You Earn (PAYE) | Paid month on month with the payroll and is calculated an escalating scale basis up to 40% | |
| Value Added Tax | 15% | |
| Rural District Council land taxes | Rates vary and are set by Rural district Councils and paid as per regulations | |
| Mining Industry Pension Fund (MIPF) | Most Mines are required by law to ensure that their employees are members of the MIPF or such other pension fund as they may have set up. | |
| Customs Duty Incentives | Current incentives include: Rebate of duty on goods for the prospecting and search for mineral deposits. Rebate of duty on eligible goods imported in terms of an agreement entered as a result of being a holder of a special mining lease. Suspension of duty on eligible goods imported for specific mine development operations during the project’s life cycle for mining development operations such as sinking shafts, installation of machinery, construction and erection of facilities for the production and conveyance of minerals. Deferment of Value Added Tax can be allowed on imported capital equipment subject to the conditions set by ZIMRA. The holder of a Special Grant can acquire a Rebate of duty on goods for use in petroleum exploration or production. | |
| Capital Gains | Acquired pre-22 February 2019 Listed securities: 1% of proceeds. Property: 5% of proceeds. Unlisted securities: 5% of proceeds. Acquired post-22 February 2019 Listed securities: 1% of proceeds. Property: 20% of capital gain. Unlisted securities: 20% of capital gain. | |
| Special Capital Gains Tax | Acquired post – 1 January 2024 Chargeable on the transfer of mining title. Calculated at 20% of the value of the transaction | |
| Marketing Commission (Mineral Marketing Corporation of Zimbabwe) | All minerals in Zimbabwe are subject to a marketing commission to MMCZ of 0.875% of gross revenue. This tax is collected by ZIMRA. | |
| Environmental Management Authority (EMA) General Environmental Impact Assessment Cost | Review Fee with EMA + 0.8%, 1% or 1.2% of project cost. The First Certificate is valid for 2 years. | |
| Levy on gross value of lithium, black granite, quarry stones and uncut and cut dimensional stone | 1 % of the gross value of the sale within Zimbabwe or on export of lithium, black granite, quarry stones and uncut and cut dimensional stone. | |
SOCIAL LICENCE TO OPERATE
In Zimbabwe, the process of acquiring mining rights involves significant community consultation to ensure that projects are developed with the support and involvement of local communities. This consultative approach is embedded in Zimbabwean law through the Environmental Management Act (EMA), which requires an Environmental Impact Assessment (EIA) as a prerequisite for mining rights approval.
The Environmental Impact Assessment (EIA)
The EIA process is a comprehensive study that evaluates the potential environmental, social, and economic impacts of a proposed mining project. Before any mining rights are granted, the mining entity must commission an EIA. This assessment includes:
Identification of Environmental Impacts: Evaluating how the project might impact air and water quality, land use, biodiversity, and natural resources.
Social Impact Assessment: Assessing how the project could affect local communities, including potential disruptions to lifestyles, health risks, and the potential for job creation and economic development.
Economic Analysis: Considering the financial benefits of the project, such as employment and infrastructure, alongside any economic costs like the impact on agriculture or other local industries.
Community Consultation: A Key Feature of the EIA
Community consultation is central to the EIA process and aims to address the needs, concerns, and expectations of those directly affected by the mining project. This involves:
Informing the Community: Sharing information about the project’s scope, benefits, and potential challenges in an accessible and transparent manner.
Gathering Community Input: Inviting feedback from the local population to understand their concerns, values, and expectations related to the project.
Incorporating Feedback: Using community insights to adjust or improve project plans, particularly where there may be environmental or social risks. When done effectively, community consultation establishes a mutual understanding between mining companies and communities, fostering a social license to operate. This informal but critical “license” can prevent conflicts and improve project sustainability by aligning the project’s goals with community interests.
MINING TAX HIGHLIGHTS IN ZIMBABWE, 2024
The new Finance Act, 2023 (hereinafter referred to as the Act) which came into force on the 1st of January 2024 implemented a bulk of the issues proposed by the Minister of Finance in the 2024 National Budget which have an impact on the Mining Industry in Zimbabwe. Some of the major aspects which affect the Mining Industry include the following:
Special Capital Gains Tax
The Capital Gains Tax Act [Chapter 23:01] is amended by the insertion of section 30B which provides for a 20% special capital gains tax chargeable on entities acquiring mining title or any interest therein. The tax shall be chargeable on the value of the transaction. Further the tax applies to a transaction involving the transfer of a mining title acquired within the ten years prior to the 1st of January 2024 or that acquired on or any time after the 1st of January 2024.
The special capital gains tax shall be paid in United States Dollars or any other foreign currency at the rate of twenty percent of the total value of the transaction unless the transfer is subject to special approvals by the Minister. The tax is to be paid no later than the 1st of April 2024 for mining titles acquired prior to 1 January 2024. For mining titles acquired on or after the 1st of January 2024, the tax is to be paid within thirty days after the transaction is concluded. No transfer of a mining title shall be registered unless the special capital gains tax has been paid.
Levy On Gross Value Of Lithium, Black Granite, Quarry Stones And Uncut And Cut Dimensional Stone
The Finance Act [Chapter 23:04] is amended with the insertion of section 22P which provides for a levy of one percent of the gross value of the sale within Zimbabwe or on export of lithium, black granite, quarry stones and cut and uncut dimensional stone.
Strategic Minerals
The Act amends the Mines and Minerals Act to insert a new section 3A which provides for “Strategic minerals.” These are minerals deemed strategic by virtue of their importance to the economic, social, industrial or security interests of Zimbabwe. The President, in consultation with the Minister of Mines and Mining Development, shall designate a mineral as a strategic mineral by publishing in the Gazette.
Special conditions on strategic minerals
- Any person wishing to mine a strategic mineral ought to obtain a special mining lease or a special grant.
- To be eligible for a special mining lease or grant, applicants must demonstrate their intention to invest at least one hundred million US dollars (or a lesser amount as prescribed by the Minister) during the lease or grant’s duration.
- Before obtaining a special mining lease or special grant, the person concerned must enter an agreement with the Minister of Mines and Mining Development concerning the formation of a company under whose name the special mining lease shall be held (and the state ought to have a defined stake in that company) and any special conditions relating to the exploration, exploitation, marketing or beneficiation of the strategic mineral, safeguards for the sake of the environment protection and any stakeholdership to be extended to the community.
The Act further amends the Mines and Minerals Act to introduce a second schedule which provides a list of minerals deemed to be strategic minerals. Amongst the minerals are lithium, diamond, copper, mineral oils, nickel, coal and iron ore.
Agents For Collection of Royalties in Kind
The Finance Act, 2023 amends Chapter II of the Finance Act [Chapter 23:04] by the insertion of section 37C. In terms of the new section the Minister of Mines and Mining Development may appoint the Minerals Marketing Corporation of Zimbabwe, the Reserve Bank, Fidelity Printers and Refiners (Pvt) Ltd or any other person as a collecting agent of royalties in kind.
Zimbabwe’s mining sector presents significant opportunities for investors, bolstered by a rich array of mineral resources and a commitment to improving the regulatory framework. Engaging with legal experts familiar with Zimbabwe’s mining laws is essential for navigating this dynamic landscape and maximizing investment potential.
Our Mining Law Practice group is available to assist with any mining law-related inquiries or concerns on info@mmmlawfirm.co.zw
0 Comments