State and producers royalties dispute

State and producers royalties dispute
Published: 10 January 2006

Government and cement producers are reportedly in dispute over the companies’ refusal to pay a two per cent royalty in a development that has unearthed inconsistencies in the country’s mining legislation.

The Zimbabwian government has since ordered Circle Cement to "honour its obligations" and set a meeting to thrash out the outstanding issues. Sources said last week that the cement producer was seeking legal advice to avoid payment of royalties citing that lime cannot be identified as a mineral.

Circle Cement’s MD Fund Yong Vin confirmed the development but said it was not restricted to his company only. "I know there is a problem like that but it’s not with our company only," he said, referring further questions to the GM Gilfern Moyo who could not be contacted for comment. However a government source said Circle had flatly refused to pay. "Circle Cement is refusing to pay on the basis that lime cannot be qualified as a mineral," said the source.

The source said government could lose the case because it does not have evidence to support its case. The MD of Portland Holdings, Trevor Barnard, said their refusal to honour the royalty was based on the discrepancies in mining legislation.

"SI 39 of 2005 seeks to collect a royalty on all minerals but SI 91 of 1990 (second schedule) specifically declares that sand, clay and stone - including limestone, required and used for building - brick manufacture etc is not a mineral as defined by the Mines and Minerals Act. This is supported by an opinion from the Chamber of Mines," said Barnard.