Mozambique government to revise ‘absurd’ taxes on small mines

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Mozambique’s government is currently working to revise new tax rates which are threatening to put small miners out of business, Zitamar News has learned.

Complaints have centred on taxes charged for prospection and exploration rights and for mining certificates, which in some cases have increased 250-fold since the new mining tax law came into force on 1 January 2015.

The new regime charges an annual fee of 17,500 meticais per hectare for mines up to 500 hectares (5km2) in their first five years of operation, and 25,000Mt/ha thereafter. Previously, a mine of between 400-500ha attracted an annual charge of just 50,000Mt.

The rule change means that a mining certificate for a mine of 500ha, the largest covered under the regime, has rocketed from 50,000Mt per year to 8,750,000Mt in its first five years of operation, and 12,500,000Mt thereafter.

Isabel Manjate, an administrative assistant at mining company Frontiers Lda, which manages a 460-hectare mine in Mozambique, told Zitamar News her company learned three weeks ago that it has to start paying the new tax. “There was no warning,” she said. “It’s absurd”.

“Before, we were paying 50,000Mt but now, they say we have to pay about eight million…We can’t keep the company going at that level,” she said yesterday.

However, following many complaints from mining investors, MIREME has started a process to revise the tax law, an official from the ministry told Zitamar.

“Teams have been created to work on the issue, from this ministry [MIREME] and the ministry of the economy and finance, which is mainly responsible for the [tax]levels”, the official said on Tuesday.

Dr Daniel Luís Ibraímo, a geologist at Maputo’s Eduardo Mondlane University, told Zitamar the current taxes are particularly damaging to Mozambique’s home-grown entrepreneurs. “This table of prices makes you think that it’s only foreigners who should exploit the mines, because a large part of the Mozambican investors are small and medium-sized enterprises (SMEs), and at this price they will make no profit.

“Apart from the elevated price to get a certificate, there’s also the situation of low market prices for resources,” he added.

According to an official from the office of the energy minister, complaints are centred on the price of the mining certificate and on the price of prospection and exploration licences, which have gone up between seven-fold and 10-fold. The official, speaking on condition of anonymity, said the government was revisiting those prices as well as the price paid for mineral water concessions.

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