1.

it develops infrastructure through corporate social responsibility (building schools)

2. Some minerals like oil are necessary for powering vehicles and the transport industry
(lithium)
3. The mining sector generates employment
4. Makes a significant contribution to the state coffers through taxation of mining
activities
5. It brings in foreign currency through export of minerals

Disadvantages of mining

1) Mining can lead to serious environmental harm – deforestation, leading to land

degradation, siltation of dams, atmospheric and water pollution, cyanide and mercury
contamination. Cyanide in mining is used for processing of gold.
2) Traditional forms of mining can be risky and unsafe for mining workers. Strip mining
or open cast mining.
3) Health effects of mining can be devastating for example breathing from the smoke
furnaces
4) Some argue that mining operations exacerbates global warming.

Types of minerals found in Zimbabwe

1) Gold
2) Platinum
3) Coal
4) Chrome
5) Uranium
6) Asbestos
7) Iron
8) Zinc
9) Silver
10) Manganese
11) Copper
12) Dolomite- limestone
13) Granite -
14) Nickel
15) Phosphate
16) Tantalite
17) Tin
18) Emeralds
19) Lead
20) Aquamarine
21) Antimone
22) Rhodium
23) Palladium
24) Assenic
 25) Niobium
26) Feldspar
27) Ammonia
28) Bentonite
29) Cobalt
30) Ferrochromium
31) Graphite
32) Lithium
33) Brine
34) Perlite
35) Raw Steel
36) Pyrophylite
37) Hydrolic cement
38) Vermiculite
39) Natural gas
40) Mineral oil

Definition of terms

1) Mineral reserve. This is an estimated amount of mineral in a body of ore. Ore is the
mineral containing material (rock)
2) Grade. This is the quantity and quality of mineral within the ore
3) Assay. To assay is the process of testing the content of the mineral ore. It is the
qualitative or quantitative analysis of the mineral ore to determine its components.
From the testing you also obtain the grade. This is important to get the wealthy
estimates of the mineral and whether you are going to make profits or loss in the
mineral process
4) Slimes/tailings also known as mine dumps these are the unwanted material or the
waste rock that results from the extraction of the mineral. They are the materials left
over after the process of separating the valuable fraction from the uneconomic
fraction.
5) Mining claim. This is the claim of the right to extract minerals from a tract of land.
Mining location. This is a defined area of ground in respect in which mining rights
have been acquired. It is the area where the minerals are to be found, which is pegged,
where one is to carry out the mining activities.
6) Miner. A miner is a person actually carrying on the work of mining on any mining
location whether he is a holder of a mining lease or an assignee of the rights of such
holder.
7) Mining claim holder. The person in whose name the mining location is registered.
8) Peg or beacon. It’s an indication of the boundaries or extent of the mine or claim
9) Stock pile. The unprocessed material
10) Leaching. This is the dissolution of gold from the crushed material. It’s done with
chemical called cyanide. It’s also called Gold cyanidation. The dissolved gold is then
concentrated to make solid gold bars or solid gold.
 11) Reef. This is a gold bearing horizon
12) Shaft. It’s the opening cut downwards from the surface to the ore body. It can be used
for transportation of personnel, equipment, supplies and even the ore or waste.
13) Overburden. This is the waste material covering the ore body for open cast mining
you have to remove the overburden.
14) Productivity. This usually works in mining firms and companies. This is an
expression of labour used and is based either upon the ratio of the grams of minerals
produced to the total number of employees.
a. Rehabilitation. The process of restoring the mined land to a condition which is
almost similar to its original state.
15) Environmental impact assessment. This is an evaluation of the probable impacts of
the mining operations on the environment –environment refers to the area around us
that is water, atmosphere, land vegetation, animals.

Sources of mining law

Legislation- statute mines and minerals act

Case law and judicial precedents
Common law principles
Authoritative text they are not of binding effect but they provide a persuasive value

The owner of the land is not only the owner of the land on the surface but everything that
attaches underneath down to hell. Common law position. This position has since been altered
by case law and statute.
Jourbet v Muranda

Mining methods

There are two categories of mining methods surface mining and underground mining
1) Surface mining. It is carried out where minerals occur close to the surface this can be
strip mining or open cast mining. Open cast mining takes place in open pits. Mining
commences with a cut which is initiated by the removal of the overburden to access
buried deposits of useful materials. The technique is referred to open cutting or
stripping, classically stripping is used to mine coal. For open mining see the case of
Grand mines pvt v Giddeyno 199 vl1 SA 960.
2) Underground mining is carried out where mineral deposits occur several metres or
kilometres beneath the earth surface. It can be shallow mining or deep underground
mining. Gold mining is a good example of underground mining but it is also used for
platinum and diamonds

History of mining law in Zimbabwe

Zimbabwean law is based on Roman Dutch and common law; however mining laws are
largely influenced by common law principles relating to property law. It is within the various
statutes and case law governing property that the notion of mineral rights has developed since
the 19th century. In property law terms mineral rights have been classified as quasi
servitudes, personnel quasi servitudes or limited real rights. Mining rights are considered to
be limited real rights conferring on the holder, the right to prospect, to mine and dispose of
the land belonging to another. The right to prospect and deposit minerals belonging to
another

What is the role of government in mining?

1) To enforce legislation (the provisions of the mine and minerals act chapter 21:05) and
other appropriate legislation. ( mines and health regulations, indigenization act
2) Granting of mining rights, mining rights can be grated in the following ways
i. Mining leases,
ii. certificates of registration of mining claims,
iii. special grants,
iv. exclusive prospecting orders
3) government is also responsible for registration of custom millers (machine used to
crush the ore)
4) To initiate legislation and recommend amendments when necessary.
5) Government also create and maintain an accurate data base for all registration,
cancellation and productions
6) Government is also responsible for the marketing of minerals through ( MMCZ)
Minerals marketing corporation of Zimbabwe.

Research THE RELATIONSHIP BETWEEN MINING LAW AND OTHER BRANCHES

OF LAW FOR EXAMPLE MINING LAW AND PROPERTY LAW, MINING LAW AND
ENVIRONMENTAL LAW, MINING LAW AND HUMAN RIGHTS LAW

Acquisition of mining rights or title

The mines and minerals act chapter 21:05 is the principle law governing mining in
Zimbabwe. The act was enacted in 1961 and has been amendment on various occasions since
then. The act provides for among other things security of tenure, acquisition, maintenance
and relinquishments of mining title. Section 2 of the act vests the dominion in the right to
search, to mine and to dispose of all minerals, oils and natural gas in the President.

Union Government v Marais 1920 AD common law position the owner of the land is not only
the owner of the surface mine and mineral but everything that is adequate to it that is from the
surface of land down to hell and to heavens, this was also the position as was in the case of
Minister of Minerals and Energy v Agri South Africa but section 2 of the act alters this
position

So therefore the owner of the land does not enjoy an exclusive right in terms of his or her
land.
One acquires rights to work on mineral deposits through an application to the mining
commissioner for the district in which the mining location is located.
Mining activity is open to both locals and foreigners, individuals and companies but for
individuals they must be above the age of 18 in terms of section 15 and 20 of the mines and
minerals act. For foreign individuals and companies to mine in Zimbabwe they must first
incorporate a company in Zimbabwe under which mining activities would be executed.

MODES OF ACQUISITION OF MINING TITLE

Mining title can be acquired through any of the following ways

1) Registrations of a mining claim on a land open to prospecting and pegging. You can’t
prospect on a land set aside for the purposes of development, land of parks, on a
graveyard or cemetery
2) By transfer of mining title from another person that is cession whereby we have the
grantor and grantee
3) By a standard tribute agreement (Durma v Siziba)
4) By application of a special grant
5) By application for a mining lease

Acquisition by prospecting, pegging and registration of a mining claim

Any person who is a permanent resident and is above the age of 18 or his or her duly
appointed agent may take out one or more prospecting licenses at any mining commissioner’s
office, upon payment of an appropriate fee (see section 15 and section 20 of the mines and
minerals act). A person who is not a permanent resident of Zimbabwe shall not be entitled to
make an application for a prospecting license unless he or she has first obtained a prior
written consent of the secretary of the ministry of mines which consent he or she must submit
with the application for a prospecting license. See section 15 sub section 1 of the act. A
mining claim can be pegged after prospecting (searching for any mineral deposits using
detectors) or an aero magnetic survey of a given piece of land. This is followed by a process
called exploration which can be done through drilling to the core of the mineral (diamond
drilling) a list of active and dormant mines can be obtained from the mining commissioner of
the district so that one can peg a dormant or forfeited mine and register it in one name.

Application<License< prospecting< registration of mining location<exploration< mining

After assaying we get the grade of the ore

The prospecting license is valid for 24 months, the holder of a prospecting license is entitled
to peg and register a claim further the claim holder shall have a right to prospect and search
for minerals on the land open to prospecting and pegging but not removing the ore save for
the bona fide purpose of having it assayed but not of removing the ore (see section 27 and
read together with section 29 of the act). The claim becomes a registered mining location
where mining activities can take place

One can also obtain an approved prospectus which is valid for 5 years. The prospecting
license may be used anywhere in Zimbabwe. The holder cannot sell his license to another
person.

Land open to prospecting (section 26 of the act)

All state land and communal land is open to prospecting, all private land is also open to
prospecting

Land not open to prospecting

Section 31 of the act. According to section 31 no person shall be entitled to exercise his rights
under a prospecting license upon

1) Land which is within 450 metres from a homestead or the sight of an intended
homestead.
2) Land which is 90 metres from any area set aside from the construction of houses
3) Land which is 90 metres from any permanent cattle dip tank
4) Land under cultivation or within 50 metres thereof
5) Land or mining location other than in respect of which the prospector may have
acquired the exclusive right of prospecting under such license.
6) Land within the surveyed limits of any city
7) Any licensed aerodrome or any emergency landing zone or ground
8) Any rifle range of the state, any railway reserve or any cemetery

Obligations of the prospecting holder

1) The licensed holder must give notice of his or her intentions to prospect on private
land to the land holder. This has sometimes confused with permission to prospect .
Here, the prospecting license holder will be merely notifying the land holder of his
intention to prospect within the land or farm. The farmer or land owner cannot refuse
prospecting activities on his land open to prospecting and pegging because of section
2 which vest the dominion in the state President. N.B they are two ways of delivering
the notice to prospect viz that is by registered post or by hand but it is better to use
this method so that the land owner or farmer can discuss and establish good working
relations.
2) To appoint a responsible person to be in charge of the operation if the owner is absent
for more than 24 hours.
3) He or she is obliged to carry out the prospecting in a good workman like manner He
or she is obliged to leave the area where he was prospecting in the original state and
 on leaving the area or land he or she is obliged to fill on trenches and excavations
made

Exclusive prospecting order

The EPO confers the exclusive right to prospect for specified minerals in any defined area.
It is obtained through an application to the mining affairs board and upon payment of a
specific fee. The net effect of an exclusive prospecting order is that once is granted no one
else can peg or prospect on that land or area. The maximum period for an EPO is 6 years
made up of 3 initial years and another 3 years of extension.

EPO holders are obliged to submit from time to time work programs to be carried out in the
next 6 to 12 months with work done in the past 6 to 12 months.

The rights granted under an EPO are personal rights they are not exclusive rights, this can be
altered by the minister upon recommendations from the mining affairs board, to either cede
or assign to another person in whole or in part.

Acquisition by transfer

See section 275-279 of the act. When a registered mining location is sold or alienated the
seller or person to whom the land or claim is so alienated shall notify the mining
commissioner within 16 days of the transaction. If it’s the seller he or she shall inform the
mining commissioner of the name of the person to whom its sold and the amount for which it
is sold and the date of the sale or the transaction

Acquisition by a tribute agreement

Read the case of Durma v Siziba zlr 1996 636 (S) where the nature of a tribute agreement
was explained. Section 283 defines a tribute agreement

The holder of a mining location may agree in writing to grant a tribute to any other person in
such a scenario the mining location holder is called the grantor and the recipient becomes the
tributor. The grantor must apply to the commissioner for the registration of a notarial deed
embodying the terms of such agreement.
The status of a tribute agreement was clearly provided for in the case of Durma v Siziba
whereupon it was defined as a contract sui generis being neither a lease nor a sale at common
law but that which involves two parties one who is called the grantor and the tributor. A
grantor is one who has a mining claim and the tributor is the one to whom the right to mine
from the incorporeal right of the claimholder on a certain piece of land is given. The tributor
agrees to win precious minerals and pay a fee known as a royalty in respect of the value of
the precious minerals so mined.
In the case of Durma v Siziba there was conflict between the two parties pertaining to the
nature of the agreement. This was an unusual agreement whereupon although the contract
was on a standard tribute agreement form the tributor instead of paying a royalty on the
percentage value of the ore agreed to pay a monthly amount of $5000. Under the conditions
clause of the agreement the parties agreed that the tributor will exercise surface rights only.
So they was a dispute between the nature of agreement and the extent of rights provided for

The court held that the contract between the two parties was irrelevant and that the document
constituted the sole memorial between the parties

Acquisition by a special grant

see section 291 defines a special grant

Government may issue to any person, a special grant to carry out prospecting or mining
operations upon a defined area which has been reserved against prospecting and pegging. For
example wildlife reserve. Special grants are usually granted for certain minerals for example
coal, natural gas, diamonds and mineral oils.

Acquisition by means of a mining lease

Section 135
A holder of a mining location or contiguous claims (sharing a common border) may make a
written application to the mining commissioner for the issue to him or her mining lease for
the defined area. The mining lease holder has the right to exclusively mine any deposit or
minerals that occur within the vertical limits of the mining lease.

Simbi v Mazuwa one should not infringe the vertical limits of mining rights extending
to horizontal boundaries.

TENURE AND PRESERVATION OF MINING TITLE

As noted earlier all minerals belong to the state when one registers a claim he is in actual fact
hiring a mineral right from the state just like in any other hiring agreement, rent become due
and payable from time to time. The mineral rent is called the annual license fee or inspection
fee. In the case of mining leases it is called ground rental fee

Methods of preserving mining title

1) By payment of an annual inspection fee. Inspection fee is payable initially within 6

months of registration; thereafter it is payable at a 12 month interval. So mining title
or rights is preserved by paying the annual license fee when it falls due in the case of
mining lease it is called the ground rental fee. Failure to pay results in forfeiture of the
mining rights
 2) By working the mineral deposit. All mining claims should be continuously worked in
order to obtain a renewal of title. This means that one cannot hold the mineral deposit
for the purposes of speculation that is trying to prevent others from acquiring mining
rights. The government can exercise a reversionary right that is taking the claim back
and reassign it. The principle is you use it or lose it principle.
3) By compliance with the law for example environmental impact assessment laws and
tender a report when it falls you, where adverse effects on the environment are
extremely recognised mineral rights can be lost because of the principle of
intergenerational equity (we are trustees of future generations we should exploit
resources in a manner which sustains future generations)

They is a problem of institutional overlaps regarding the harmonising of the mining laws and
environmental laws because mining brings revenue which is needed to turn around the
economy thereby subjugating environmental concerns Anglo v Maranda
HOW CAN MINING TITLE BE FORFEITED OR LOST

1) By not renewing mining title.

2) Failure to abide by mining and environmental regulations
3) Failure to work the mine and hold it for speculation purposes
4) Failure to pay mining (annual inspection fees or ground rental fee)
5) Failure to indigenize

Disposition of mining title

Disposal of mining title

1) By transfer for example of a mining lease. A mining lease can be disposed by transfer;
the transfer must be approved by the mining affairs board. The Board will not transfer
the mining lease if the transferee is in a financial state which will not enable him or
her to buy the private land on which the location is situated. In the event that the
landowner or holder applies for compulsory purchase of the land, in terms section 314
of the act, the transferee must guarantee that such payment is required, there will be
able to pay the land holder and acquire the land.
2) Abandonment-renunciation of mining title. We have what is known as partial
abandonment or partial renunciation and total abandonment of a mining lease or a
mining title.
Partial abandonment section 155 of the act

An application has to be made to the mining commissioner for the abandonment of a

portion(s) of mining lease which application must be considered by the mining affairs board.
In the event that the application is granted, upon abandonment the lease holder shall remove
pegs or direction marks indicating the direction and the boundary lines of the mining location
and erect new beacons on the reduced area.
Total abandonment of a mining lease section 156 of the mining act

A claim holder who wishes to abandon the whole of his or her claim may apply in writing to
the mining affairs board through the mining commissioner, for the cancellation of the mining
lease. There is a proviso (condition) provided that the claim holder shall not apply for
abandonment if the mining lease is subject of a hypothecation such that there is someone who
has power over the land or an option.

3) Disposition by termination

This is a forced way, it is compulsory and involuntary compared to abandonment. Aka

compulsory disposition. Before terminating the mining lease the mining affairs board must
first consider the reasons for such termination. Common reasons for termination include the
following:

i)Failure by the leaseholder to comply with the terms of a mining lease,

ii) Failure to pay annual fees N.B usually the board imposes penalties on lease holders before
considering termination

PRIORITY OF MINING RIGHTS

Munamato mining syndicate v mining

See the case of

commissioner and ors 1999 vl2 zlr 136

This case deals with acquisition of mining title especially the rights of the prior pegger v
rights of the latter pegger. The principle of priority of mining rights is set forth under section
177 of the mines and minerals act as follows, “If such …title has been duly maintained, shall
in every case determine the rights as between the various peggers of mining locations, reefs
(it’s a gold bearing horizon), deposits… and in all cases of disputes, the rules shall be
followed that; in the event of the rights of the subsequent pegger conflict with the rights of a
prior pegger, then, to the extent to which such rights conflict, the rights of any subsequent
pegger shall be subordinated to those of the prior pegger, and all certificates of registration
shall be deemed to be issued subject to the above conditions” N.B rights of the latter pegger
are supposed to be subordinate to the earlier pegger.

There must be made a first physical act on the farm or piece of land. This position was clearly
explained in the case of Munamato mining Syndicate v Mining Commissioner whereupon
Nesh Trading company as second respondent to this case obtained an exclusive prospecting
order to search and mine granite rock. Later on Munamato was also granted the exclusive
prospecting order and argued that his act of making an application to the court constituted a
physical act. The court held that a physical act means more than an application that, it
requires visiting the mining claim and peg that is establishing beacons which determine the
boundaries of the claim. And in as much as in this case they was a dispute to the actual dates
at which Nesh trading pegged the land, the respondent did not disagree that Nesh trading
pegged first the land. The court ruled that Nesh trading by putting the pegs first obtained -
nbpriority of acquisition of mining rights.

Rights of the Miner v Landowner

Once one registers a claim he or she is entitled to develop the mining operations however,
claims are usually situated on another person’s piece of land. Once the claim holder begins to
erect plans and build houses he is affecting the rights of the landowner, to this end section
178 and 179 provides for the rules by which the miner or claim holder should abide.
Such that it mitigates the issue of disputes.

Surface rights of miner section 178

The miner of a registered mining location can do the following:

i) He or she can is use any of the surface within the boundaries of the claim for all
necessary mining purposes
ii) He can use free of charge, soil, waste rock or indigenous grass situated within the
mining location for all necessary mining purposes.
iii) He can sell or otherwise dispose of waste rock removed during the course of
mining operations
iv) He can take any water from the land for mining purposes only
v) He can use timber for firewood or for mining purposes provided that the timber is
removed within the boundaries of the mining location N.B an agreement should
have been breached with the landowner to cut and to use timber. When such
agreement is negotiated it should include the following
a) The area in which the timber may be cut
b) The period within which the timber may be taken
c) The quantity and type of the wood to be cut
d) The price to be paid in respect of the timber

Rights of the landowner section 179-180 of the act

i) The landowner retains the right to graze stock or cultivate the surface provided
that it does not interfere with the proper working of location for the mining
purposes.

ii) Right to receive compensation. If the landowner is deprived of his right to use of
his land, he can claim compensation in terms of section 188 of the act.
 Conflict cases
How land owners have clashed in respect of their rights

Anglo operations ltd v Sandhurst Estates pvt 2007 vl2 ALL S.A 567
Jourbet v Maranda 2010 vl2 S.A pg 67

The Anglo Operation case, where the landowner appealed to the court to restrict the miner
not to conduct open cast mining which was deemed to be catastrophic to the environment
than underground mining. And the court ruled in favour of the miner, it held the miner had
right to conduct open cast mining.

In this case, the court was requested to determine whether the right of a mineral right holder
include the right to open cast mining at the expense of the surface rights owner (landowner)
the court likened a mineral right to that of quasi-servitude. It was held that provided that it
was necessary to undertake open cast mining operations and provided that the right is
exercised in a reasonable way and all precautionary measures against degrading the
environment are taken, the rights of the landowner are subservient to the rights of the
claimholder. In such a case the mineral rights holders can conduct opencast mining at the
expense of the landowner. It was held further that the surface owner must endure the
inconvenience and impact on his land and business. The court held further that the correct
approach in resolving such disputes has been developed in our law involving conflicts
between holders of servitudial rights and the holders of the servient tenements or property see
property law on servitude. In accordance with these principles, the owner of the servient
property is bound to allow the holder of the servitude to do what it is necessary for the proper
exercise of his rights however, the holder of the servitudial right is in turn bond to exercise
his rights civilita moddo (it drives its authority from civilisation) in a civilised method by
which you are supposed to exercise you right that is reasonably viewed with as much
consideration and with the least possible inconvenience to the landowner) that is less
onerous . The court held further that in applying these principles to mineral rights, it can be
accepted that the zholder of a mineral right is entitled to go on to the property, to search for
the minerals and if he finds them to remove them. This include the right of the mineral holder
to do whatever is necessary to attain his or her ultimate goal as emphasized by the law. This
position was supported in the case of

Hudison v Mann,

In case of irreconcilable conflict the use of the surface rights must be subordinated to mineral
exploration. The solution of a dispute in such a case resolves itself into a determination of a
C question of fact, viz., whether or not the holder of the mineral rights acts bona fide and
reasonably in the course of exercising his rights. He must exercise his rights in a manner least
onerous or injurious to the owner of the surface rights but he is not obliged to forego ordinary
and reasonable enjoyment merely because his operations and activities are detrimental to the
interests of the surface owner
Trojan Exploration case

Since open cast mining is usually more invasive of the surface owners land rights than
underground mining, it should only be allowed if its reasonably necessary whether it qualifies
as such in any particular case cannot be determine at a theoretical level. Reasonable necessity
will depend on the facts of the case (each case according to its merits) so the case of Anglo
do not serve as a blueprint of the law the more invasive the mining operations would warrant
tilting the balance of justice to the landowner.

Jourbet Case

This was a case on appeal against a high court order granting an interdict restraining Jourbet
from refusing Maranda access to a certain piece of land. The matter revolved around a gold
mine originally worked in the early 1990’s, after which mining activities ceased however,
mineral assay or sampling reports which were conducted subsequently indicated that the land
remained rich in gold. Maranda had applied for a prospecting right and a mining right. On
acceptance of its mining application and its registration Maranda lodged an environmental
management plan with the environmental authorities. Maranda notified the landowner that it
had made the application, lodged the environmental management plan and was notifying the
landowner to accept or to object the operation of mining operation. The notice also indicated
Maranda’s intentions to do open cast mining. The Landowner objected to the application
alleging that the proposed mining operation would have a detrimental impact on his land’s
eco-tourist and environmentally orientated activities. The mining activities, would in his view
negatively impact on the game and game breeding operations arising from the noise and
blasting, which would subsequently result in cancellation of safari bookings. Furthermore the
mining operations would lead to degradation and pollution of the environment

Despite the objection, the mining permit was granted and the environmental management
plan was approved. The court upheld the decision of the minister to grant the mining permit
based in the interventions raised in the environmental management plan. This shows that the
extraction of minerals is considered important than any other forms of land use. The
economic concerns of the affected landowners are secondary to the interest of extracting the
minerals for the benefit of the state. Moreover the environment of the land owner would
through mitigatory interventions recover years after the extraction of the minerals therefore
mineral rights are superior to any other rights, this is also the reason why the law has
transferred the mineral rights into the hands of the state for easy administration. The state
become arbiter between the landowner and the mineral rights holder see also the case of
i) Swaziland Municipality v Law,
ii) City of Cape town v Maccsand (cct) 103 -11 2012 ZACC 7,
iii) Meepo v Kotze and ors 2007 ZACHC pg 47,
iv) Hudson v Manne and anor 1950 vl 4 S.A pg 45
v) Trojan exploration company v Ransenberg platinum mines ltd 1996 vl4 sa 499
N.B Mining rights are superior to land rights (Mining operation takes precedence upon any
other land use) except to special circumstances where the mineral right holder is prohibited
from going ahead with mining operations to give the rights of the landowner.

Mining taxation

The tax regime for mining operations is set out on statute particularly mines and minerals act,
income tax act and the finance act. There do not only regulated conveyancing and notarial
practices. The state as the owner of all mineral realizes revenue from the mining sector by
either taxation or holding of mining shares in mining companies.

Types of mining levies or taxes

Royalties (tax)

Of taxes payable by mining companies royalties makes a significant contribution to the state
coffers however, this depends on the percentage and level of royalties. Ideally revenue
realized from taxation of mining operations should be used to develop the country and
eliminate poverty. However, as acknowledged by the then Minister of finance during his mid-
term fiscals’ report in 2010, the mining tax regime is not satisfactory for example royalties
collected from precious metals between January to September 2010 amounted to 20,7 million
dollars from sales of $500,8 million. This means that the revenue in the form of mining tax is
not enough to contribute immediately to the needs of the state and people living in poverty.
Other taxes and levies paid by the mining companies are normally absorbed by government
departments and do not go to the consolidated revenue fund for example the environmental
fee collected by the environmental management agency is absorbed by EMA. Also revenue
collected by local authorities goes to the rural district councils and not to the central pool. In
general the tax regime in the mining sector has a thin base which makes it difficult for the
country to fulfill its socio-economic, cultural needs and the expectations of communities.
This has resulted in the indigenization wave to fulfill the expectations of local communities

Taxes and Rates payable by mining operations rapecav

1) Royalties. This is the major tax paid by mining operations. ZIMRA Zimbabwe
Revenue Authority was designated as the colleting agent for all minerals except for
gold. The Reserve Bank of Zimbabwe is the sole collector of revenue for gold and
silver because this is money. The percentage rate for gold mining companies is 7%,
while diamond and platinum miners pay royalties at the rate of 10% however,
platinum also play an additional levy of 15% on unprocessed platinum shipments the
whole idea is to encourage mineral beneficiation value addition so the measure is
coercive in order to establish mineral processing plants in Zimbabwe

2) Corporate tax. This is 25% of taxable income as per section 14 (2) of the finance act.

3) VAT Value added Tax. This is 15% on all minerals however since minerals are being
exported without being processed this results in VAT being chargeable at 0% because
 in Zimbabwe we have no mineral procession plants. However after we have exported
our unprocessed ore the company as able to claim their value added tax or concession
from ZIMRA.

4) PAYEE. Pay as you earn. The rate is 0-40% of taxable income but this is the problem
with artisanal miners since their activities remain unaccounted to the mining ministry
such that they do not pay this form of tax

5) Allowable deductions. This is a levy; it’s a form of an incentive to mining companies.

This are provided for in terms of section 15 of the income tax act. These are
deductions allowed in determination of taxable income especially at prospecting stage
(borehole drillings, surveys, trenches and other exploratory work), production stage,
allowable deduction are provided for construction of buildings, hospitals, clinics,
houses and even for the purchase of motor vehicles. Allowable deductions means the
law gives the companies some incentives or concessions

6) Withholding tax. This is 10% for client without tax clearance certificates and on non-
resident technical services.

7) Export tax. Export tax is payable in respect of chrome ore and chrome fines. Its 15%
on the value of gross export proceeds that is the value of the total quantity one would
have exported. The policy is to encourage value addition.

8) Additional profit tax. This is levied or taxed on holders of special mining leases and is
charged over the above the normal income tax because it’s a special mining tax. See
section 23 of the income tax as read together with the 20rd schedule thereof

9) Assay fees. For one to do assaying one must pay the assaying fees

Tax evasion in the mining sector

Altering their books through reinvoicing, transfer pricing, under-pricing, thin capitalization
(not expanding the business if the share capital is 50000 as a business it should develop but
mining companies will simply stagnant their share capital at a very minimal level so as to
ensure the amount of tax they pay to the government is minimal.

Marketing and exportation of minerals

MMCZ Act Minerals Marketing Corporation act chapter 21:07, Mines and Minerals act and
the ZMDC act Zimbabwe Mining development corporation act

The government of Zimbabwe it does not usually participate in the mining sector. Its
participation is limited to corporations examples of such corporations are
 1) ZMDC
2) MMCZ

ZMDC

ZMDC was formed in 1982 with the main purpose being state participation in the mining
sector and save companies that were threatened with closure. ZMDC is active in exploration
and mining; it also gives assistance to corporations and small scale miners. The activities of
ZMDC are meant to be for national interest as stated in section 20 of the ZMDC act.
Whatever investment ZMDC does should benefit the people of Zimbabwe and it should
contribute to national economic development. ZMDC can operate mines on its own or
through joint ventures example of a joint venture with ZMDC for example Marange fields
where it is in partnership with Grantwale holdings and Coal Mining ltd. All these companies
are equal to Mbada diamonds. However the major question at Marange diamond fields is
whether or not the operations are benefiting local community and the nation at large. The
involvement of other state institutions and agencies reduces amounts surrendered to the
revenue consolidated fund.

MMCZ

The MMCZ is a wholly owned government parastatal which falls under the ambit of the
ministry of the mines and mining development. It was formed in 1992 as the exclusive agent
for the marketing of all minerals except for gold and silver which minerals are being
marketed through the Reserve Bank of Zimbabwe.

Reasons which necessitated formation of the MMCZ

1) To control and carry out sales and exports of all minerals produced in Zimbabwe
2) To control stock piling that is holding minerals for speculative purposes
3) To minimize the opportunities for underhand dealings and dishonesty on transfer pricing
under invoicing and any other related problems.
4) It was formed to centrally coordinate all marketing intelligence and to monitor
international affairs and technological changes to the best advantage of the state

Functions of the MMCZ

1) To act as the sole marketing board and selling agent for all minerals serve for gold
and silver see section 20 of the MMCZ Act.
2) To investigate marketing conditions for all minerals
3) To encourage local beneficiation and utilization of minerals
4) To advise the minister on all matters connected to the marketing of minerals

Procedure for marketing

For one to export minerals he or she must first obtain an export license from the ministry of
mines (the export license is valid for a specific period). When you obtain an export license
you approach the MMCZ which has a database of buyers of minerals and it also sets the price
for minerals to be exported or you state your own buyer but you cannot state your prices

MMCZ then contacts the buyer and enters into the contract for the sale and purchase of the
mineral. The contract or agreement include the purchase price, payment terms, the grade of
the ore to be exported and the delivery terms.

MMCZ required 90% down payment before the mineral can be exported or taken through the
boarders. The remaining 10% is paid after the mineral has been delivered to the premise of
the buyer. The buyer inspects and conduct assays on delivery. So the 10% can be used to
adjust the total amount to be paid after considering grade and the total quantity of the ore.
MMCZ also enters into contracts with the seller or transporter to ensure that the means of
transportation is secure, in particular the transportation should have a vehicle tracking system.
MMCZ actually visits depots of the transporter and ask for the following documents

1) Vehicle registration books

2) Vehicle insurance
3) Vehicle tracking system
4) Breakdown procedure for the transporters company N.B MMCZ also assess the
roadworthiness of the trucks

Indigenization and economic empowerment

o Indeginisation and economic empowerment Act chapter 14:33

o Statutory instrument 21/2010
o SI 34/11
o General Notice 114/ 2011
o SI 84/2011
o General Notice 280/2012

What is indigenisation

The term is defined in section of the indigenisation and Economic Empowerment Act as a
deliberate involvement of indigenous Zimbabweans in the economic activities of the country
which before that, they had no access so as to ensure the equitable ownership of the nations
resources.

What is empowerment

Defined as the creation of an environment which enhances the performance of the economic
activities of indigenous Zimbabweans

Who is an Indigenous Zimbabwean

Defined as any person who before 1980 who was disadvantaged by unfair discrimination on
the grounds of his or her race and any descendant of such person. NB General notice 114
introduced a new group of beneficiaries and these include the State through the various
companies for example Zimbabwe Mining Development Corporation.

Criticism

The designated entities don’t qualify as indigenous Zimbabweans for example ZMDC did not
exist before 1980 it was incorporated in 1982 and neither was it disadvantaged or
discriminated on the grounds of race. Designated entities; zmdc, companies inc for purposes
of indi, sswf, csos

General Notice 114/2011

Pursuant to this notice, the net effect of the Public Notice was to nationalise mining
businesses, specifically focusing on the nationalisation of profits by deeming that the state
owns 51% of non-compliant businesses. Pursuant to this notice, every mining business not
already owned or controlled by indigenous Zimbabweans with a majority share of 51%
whose net asset value was at above $1 was required to ****** an indigenisation plan by may
10 2011. The idea was to have all foreign companies indigenised. This means it was
compulsory indigenisation. The mining business were required to dispose of 51% of their
shares of business to the designated entities

Who are the designated entities?

1) ZMDC
2) Companies incorporated by ZMDC for the purpose of indigenisation process
3) Statutory sovereign wealth Fund
4) Community share ownership schemes

Deadline was to be 24 September 2011 for completion of process that is within 6 months of
submission of the indigenisation plan. However the Ministry could grant extension of 3
months up to December 24 2011. In practise the process has not been that smooth. Under the
indigenization process ****** of shares was supposed to take into account the States
ownership of shares. 51% must be disposed on the basis of evaluation agreed upon between
the Minister and Mining business concerned. In doing so the parties must take into account
the States sovereign ownership of minerals being or to be explored. This was meant to
minimise or reduce the amount to be paid for the shares disposed

SI 34/2011

It meant to amend the indigenization regulations contained in SI 21/2010. These amendments

do not specifically mention the mining industry and so are general amendments that affect all
industries. SI 21/2010 had set the time frame within which the Minister was supposed to
respond to an indigenization plan at 45 days after submission thereof.

1) SI 34/11 has amended the time frame to 90 days after submission of the
indigenization plan.
 2) SI 34/11 has criminal penalties for failure to submit an indigenization plan when
specifically required by the Ministry to do so or penalties for missing the deadline
when minister has extended submission date.
3) Provisions for the resubmission of the indigenization plan, when it has been rejected
by the minister, the law provides that, “A business whose indigenization plan has
been rejected must submit its renewed plan within 45 days.
4) There is also a criminal penalty for foreign investors who acquire a controlling
interest in a business sector which is reserved for indigenous Zimbabweans without a
prior written approval of the minister of youth development, indigenization and
empowerment. The penalty upon conviction is a fine of up to 2000 dollars or a prison
sentence of 5 years or both. NB see third schedule for reserved business S
5) They are also a new provision regarding the supporting documents to accompany an
indigenization implementation plan. This is a provision to the effect that, “Every
indigenization implementation plan must be accompanied by secondary documents
containing proof that the responsible person submitting the plan has been properly
authorised to do so.
6) Last but important, SI 34/2011 introduced a criminal penalty for under valuing of
assets, “any business that undervalues its net assets by 10% or more shall be liable for
an offence and the penalty is a fine of up to 2000 dollars or prison sentence up to 5
years or both.(to deal with under pricing by altering an invoice to pay less tax)(why
10% or more and how do you arrive to the 10%, who is that you will sent to prison,,,
ie the companies dnt go to prison.) 10% might be too low

SI 84/2011

It was meant to rectify the loopholes contained in SI 34/11

It was enacted after criticism of SI 34/11 by both members of the public and parliamentary
legal committee. It was particularly criticised for the heavy penalties laid down for business
convicted for failure to submit IP’S or at least for undervaluing net assets. Of particular
mention, the PLC pointed out that the penalties were disproportionate and heavy pointed out
that the penalties were disproportionate pursuant to SI 84, the fines were reduced. However,
SI 84 added a provision to the effect that every director, member partner of a business who
fails to submit an indigenization plan or undervalues net assets of the company, is / are to be
imprisoned This was a rejuvenation of the old SI34/2011, at the very least it became the case
of same old wine in new wine bottles.

NB : {this is critique}The minister does not have the power under the Indigenisation and
Empowerment Act to make this kind of legislation, his powers are to be derived from the Act
and there are no such powers in the Act. Furthermore, SI 84 is inconsistent with section 277
of the criminal codification and reform act -(can a company be sent to prison).

General Notice 280/2012

It provides the minimum requirements for indigenisation in other sectors other than mining
for e.g agriculture, industrial, transport, communications and telecommunications
Constitutional issues arising from indigenisation and economic empowerment laws and their
legality.

A) Right to freedom of association

It is common purpose (a banal) that for all intent and purposes a company is regarded as a
juristic person. In this light it has been argued that 51% qouta imposes upon who a mining
company or business should associate with. General notice 114 imposes partners on mining
business by specifically stating the designated entities. Companies should chose their own
business partners.

Furthermore,Constitutional issues which arise from the share

1) Is the compulsion to dispose 51% of shares to indigenous Zimbabweans in a

democratic society. What criterion did the government use to get to 51%, when the
indeginous people are not bringing any reasources.
2) Freedom of association is infringed of *****

In an attempt to answer the first question, the case of Woods and Anor v Minister of Justice
1994 (2) ZLR 195 is noteworthy. In this case the court acknowledged that the concept of
reasonableness is not very elusive (difficult to catch / ascertain) and the only legal yardstick
to determine whether the law is reasonably justifiable..., is ti examine whether the law iself is
arbitrary or excessively invasive of the right.

The case of Ngulube v Zesa and anor SC 52/2002 at 18 sets the criteria that should be used
to determine whether or not a provision should be permissible in the sense that it is arbitrary
or excessive as follows;

1) The means used to impair the freedom or the right must have been more than is
necessary to accomplish the objective of the limitation. Limitations on freedoms are
justifiable in a democratic society, however the means of limitation must be justifiable
for eg POSA and AIPPA which were drafted in 2002, people were not supposed to
move are to be seen loitering in a group of four and above but the object of limiting
political violence has been far surpassed by the means,
2) The measure designed to meet legislative object are rationally connected to it.
Rationality is an illusive concept.
3) That the legislative object is sufficiently important to justify limiting a fundamental
right.

b) Audi Alterum Partem rule

The rules of natural justice state that the other party has a right to be heard. A fundamental
question that begs to be answered is: were the views of the mining considered before the
indigenization process or laws launched? The answer is in the negative. In cavalious
disregard of the principles of natural justice with brazen impunity parties were designated/
partners were imposed, no one was heard. Zimbabwe Teachers Association v Minister of
education Emergency Powers (Maintenance of Essential Services) Regulations 1989 in which
the minister dismissed the teachers from their employment the court held that the respondent
was not competent to dismiss the teachers without affording them the rights to be heard first
therefore such dismissal was ruled to be null and void.

The other question is , is six months a reasonable for the implementation of the indigenisation
Act

NB doesn’t general notice 114 amount to expropriation or deprivation of property?

Another questions are

1) Is 6 months a reasonable time within which to complete a meaningful indigenization

process?
2) How do you arrive at 51%
3) Why not 10, 20 or 30%
4) Is it reasonably justifiable in a democratic society.

In the case of Chavhunduka v Minister of Home affairs The appellants were the editor and
senior reporter of a weekly newspaper which published an article about an attempted coup
d'etat which was said to have taken place. They were arrested on charges of contravening s G
50(2)(a) of the Law and Order (Maintenance) Act [Chapter 11:07], which makes it an offence
to publish a false statement likely to cause fear, alarm and despondency among the public. It
was held that, statutory vagueness cannot be allowed. The law must be precise enough to
enable a person to regulate his conduct. The provision was far too wide and vague. It forbade
statements "likely" to cause fear, alarm and despondency, as opposed to actually causing it.
The word "false" was also very wide, embracing the merely inaccurate as well as actual lies.
The provision could not be said to meet the requirement of being "under the authority of any
law".

The Government of Zimbabwe (GOZ) enacted the Indigenisation Act in 2007 (herafter the
Indigenisation Act), which took legal effect in 2008. The stated idea behind the law was to
indigenise the Zimbabwean economy by promoting the participation of indigenous
Zimbabweans in business and the exploitation of economic resources

The bill defines an indigenous Zimbabwean as “any person who before the 18th of April
1980 was disadvantaged by unfair discrimination on the grounds of his or her race, and any
descendant of such person.” NB General notice 114 introduced a new group of beneficiaries
and these include the State through the various companies for example Zimbabwe Mining
Development Corporation.

A Public Notice was issued to business in the mining sector what had not at the time
complied with provisions of General Notice 114. The net effect of the Public Notice was to
nationalise mining businesses, specifically focusing on the nationalisation of profits by
deeming that the state owns 51% of non-compliant businesses.

In the Public Notice issued against mining business in April 2012 we observed the worst
effects of this approach that pays no regard to the rule of law. A worrying part of the Public
Notice was a paragraph which “enjoined all Zimbabwean citizens, top management, middle
management, technical support staff and the general workforce of the companies involved
that they are now expected to defend the Zimbabwean 51% equity stake and also to uphold
and execute the national interest in respect of the administration, trade and any other business
transactions so as to ensure total indigenous economic empowerment.”

The effect of those words was to effectively open the floodgates of individual and group
action to give effect to the policy of nationalisation which, left without safeguards, could lead
to lawlessness and a breakdown of the rule of law. The provision encouraged aggressive
conduct and threatened business security. There was no requirement that the so-called
defence of the “51% Zimbabwean equity stake” must be lawful. The Minister’s statement
opened floodgates for unlawful conduct by vigilante groups under the guise of defending the
“Zimbabwean equity stake”. It would be a further assault on the rule of law, business stability
and confidence in the business sector if such a provision were repeated following General
Notice 280/2012.

The effect of GN 114/2011 impose partners on mining businesses – violates the right to
freedom of assembly and association provided in terms of section 58. The constitution allows
business entities freedom to choose partners. So this provision of the GN may be ultra vires
as well as unconstitutional.

Moreso the GN 114/2011 infringe the common law right to natural justice that is the audi
alterum partem rule which states that a person has a right to be heard before an adverse
decision is taken against him or her. The government has embarked on the indigenization
process without first giving mining companies notice of proposals and opportunity for them
to make representations

The effect of the GN 114/2011 and SI 34/2011 is the compulsory acquisition of property by
the State of which such provision must comply with section 71 of the constitution which
protects property rights. The constitution provides for assessment and payment of
compensation but the problem is that neither the provisions of GN14/2011 nor SI34/ 2011
comply with section 71 of the constitution enshrining a right to property

Section 56 (3) proscribes any provision that is discriminatory either in itself or in its effect.
Discrimination on the basis of race or place of origin of any person is specifically prohibited.
Section 23(3)(g) provides for an exception based on the implementation of affirmative action
programmes for the protection or advancement of persons or classes of persons who have
previously been disadvantaged by unfair discrimination. While this exception may be read to
include the indigenisation policy under the Indigenisation Act and its subsidiary legal
instruments, it is important to note that it does not authorise unfair discrimination. It allows
for positive discrimination but the design and implementation of the law to meet the
exception must be fair and reasonable.

Such laws are subjected to the same constitutional test that they should be reasonably
justifiable in a democratic society. While the idea of affirmative action to redress past wrongs
is recognised, it is debatable whether the design, implementation and effect of the
indigenisation laws as presently formulated would pass the constitutional test of being
reasonably justifiable in a democratic society. There is a real risk of unfair discrimination
which would make it difficult to save them by the derogation contained under Section 23(3)
(g) of the Constitution. The definition of indigenous persons is of itself exclusionary even as
against persons born in Zimbabwe to Zimbabwean parents after 1980. The personal
circumstances of individuals are not taken into account. There is no regard to the manner in
which businesses were created, financed and developed – there is a presumption that all
businesses that are owned by those who do not meet the indigenous criteria were built on the
back of past wrongs against the indigenous whereas different circumstances apply to different
individuals and businesses. A general approach to the issue risks unfairly punishing otherwise
innocent persons who have built their businesses independent of any unfair advantages of the
colonial past. This is important considering Zimbabwe has been independent for 32 years – a
period long enough to incubate and raise a successful business.

The rule of law requires that the law must be clear and certain. This is particularly important
where active compliance is required. A person must be sure and certain that the law is
applicable to his or her circumstances and the steps required for compliance must be clear. In
this case, General Notice 280/2012 lists numerous businesses that are required to comply but
there is no definition of terms. Terms like “Freight and logistics”, “Security Services”,
“Communication and networking”, “Workshops”, “Agents and sub-dealers” which are listed
as business sectors can yield any number of interpretations. Business will be left unsure
whether or not they fall into one or other category or indeed if they are covered at all and the
refore required to comply. This will increase the compliance and regulatory burden at a time
when reducing business costs should be a priority. General Notice 280/2012 is poorly drafted
and unclear and this will make compliance a very difficult if not impossible proposition in
many cases. Chavhundaka v Minister of Home of affairs

1) New group of beneficiaries the ZMDC did not exist before 1980 it was only formed in
1982

2) Rule of law

3) Audi Alterum partem rule

4) Freedom of association and assembly

5) The policy framework is discriminatory against section 56 (3) prohibiting

discrimination
 6) The law is unclear and unambiguous

7) Compulsory acquisition by the state and deprivation of right to property

Read the article do our indigenization laws abide by the international standards

MINING AND ENVIRONMENT

Every citizen of the country has a constitutional right to an environment that is not harmful to
their health and well being. Everyone has a right to have the environment protected through
legislative and the other means to prevent pollution and encourage conservation while
protecting socio-economic development yet mining destroys or affects the environment
aggressively either by removing or introducing certain things in the environment . the role of
the government therefore is to protect the environment whilst pursuing socio- economic goals
. this entails that the environmental right should be integrated into all socio-economic
development activities, thus priority should not always be given to socio-economic activities
but also to the environmental interest. Mining activities affect the environment in different
ways and these include

a) The environmental impacts of exploration and prospecting

b) The environmental impact of current mining operation.
c) The environmental of closed and unrehabilitated mines. N.B as a result of these
impacts on the environment the Zimbabwean legislature has enacted an environmental
statute called the Environmental Management Act chapter 20.27. This act defines the
environment as the natural and man made resources occuring in the lithosphere and
atmosphere. the Act is organised into 16 parts constituing 116 sections. It provides for
the following
1) Environmental right in terms of section 4 of the act which provides that every person
is entitled to a clean environment that is not harmful to health as well as access to
environmental pollution
2) The act also provide for environmental institutions for example EMA Environmental
Mangement Agency whose duties are amongst other the following.
a) To advise the Minister on any matter regarding planning, development,
exploitation and managemne to othe environment.
b) To regulate any environmental impact assessment .
c) To regulate the management and utilisation of ecologically fragile eco systems for
example swamps and wetlands.
 3) The act also establishes the environmental management body in addition to the
environmental management agency establish the environmental management board.
The director of the environmental management board is responsible in managing the
board. It also manages the property of the agencies N.B read regulations under the Act
in particular those regulations dealing with waste management. These affect mining
operations by providing that no person shall transport waste, every person who
generates waste shall employ measures to minimise waste generation through
treatment and recyling. EIA’s requirements include; a detailed description of the
project, the activities to be undertaken and the likley positive and negative impacts on
the environment and the measures proposed by the mining company or mining
business to minimise the vagaries of environmental impacts and this set of measures
is what is known as the environmental management plan. For the certification of
mining companies read ISO internations Standards Organisation and it enacted rules
which governs the certification of mining companies.

Mining and Health safety

Environmental management hazadours substances, pesticides and other toxic subtances

regulations. The food and food standards Act, the Public health Act

1) Outline the provisions and critically discuss the legality of the Mining Indegenization
Notice 114 of 2011 and SI 34 of 2011 (25 marks)
2) Critically discuss the legality of Indigenization legislation with particular reference to
the mining industry.