Scrap Fidelity's gold monopoly, says Parly committee

Published: 26 November 2018

THE Parliamentary Portfolio Committee on Mines and Mining Development has urged government to remove Fidelity Printers and Refiners (FPR)'s monopoly as the sole gold buyer to promote competition.

FPR is the only company that was licensed to buy gold from large and small-scale producers, and holders of gold-buying permits. It also does refining and exporting of gold in Zimbabwe. But a report prepared by the Parliamentary Portfolio Committee on Mines and Mining Development noted that the monopoly was now threatening the viability of large-scale miners in the country.

"The monopoly by Fidelity Printers as sole buyer of gold is threatening the viability of large-scale producers. (We recommend that the) monopoly by Fidelity as sole buyer of gold should be removed to promote competition and fair play," read the report in part.

Meanwhile, the committee also noted that the mining industry was overtaxed, with more than 22 taxes, charges and levies by various agencies like Environmental Management Agency, Minerals Marketing Corporation of Zimbabwe, rural district councils, among others.

"Royalty tax is deductible twice against best international practice. The cost and profit is charged twice in Zimbabwe. This is too high, compared with other countries in the region," the committee said.

The committee also noted that the indigenisation threshold of 51% to 49% was constricting re-capitalisation efforts of companies such as Murowa Diamonds.

"The threshold is too high. But locals should not be completely excluded from participating. Southern African Development Community countries are empowering their locals," it said.

The committee said discrimination of large-scale producers by the RBZ in the allocation of forex violates the Bill of Rights and was constricting the growth of large companies.

"Royalty should be deducted once, but government should introduce a Resource rent to cover for that gap, in line with best international practice. Rationalisation of mining taxes, levies and charges is needed by the Ministry of Finance in line with ease of doing business reforms. This matter has been pending for over a decade," the report read.

The committee recommended that the local FCA should be increased from 30 % to a range of between 70% and 95% to enable industry to acquire inputs.
- newsday

Tags: Gold,