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Zimbabwe mines, banks in crunch talks over US sanctions

by Staff reporter
13 Jun 2021 at 07:26hrs | Views
ZIMBABWE'S mines said on Friday they had kicked-off crunch meetings with banks, government and the Minerals Marketing Corporation of Zimbabwe (MMCZ) to find a solution after operators reported that their funds had been withheld in MMCZ's foreign accounts by the United States government.

The country's mines export minerals through the state-run MMCZ, which was slapped with US sanctions in 2008 for "contributing to the undermining of democratic process and institutions in Zimbabwe".

As a result, the US Office of Foreign Assets Control (OFAC) has been withholding foreign currency wired through MMCZ accounts, some of it belonging to exporters.

The MMCZ was among several key institutions slapped with sanctions in Zimbabwe including financial services powerhouses CBZ Holdings and ZB Financial Holdings Limited.

However, some of these restrictions have been removed.

But the MMCZ remains under a tight leash, which it says has undermined international trade in minerals.

Last week some miners struggled to pay workers, while several commitments had also not been settled after funds held in MMCZ accounts were withheld.

But in an interview with Standardbusiness, incoming Chamber of Mines of Zimbabwe (CoMZ) president Colin Chibafa said miners had immediately engaged government, which said it was taking action to save the industry.

It was not clear what new action President Emmerson Mnangagwa's administration had lined up to save mines given that it is a crisis that has transcended a decade.

"Affected miners have engaged their bankers on this matter and as a chamber we have raised the matter with the government," Chibafa said.

"We are informed that the relevant authorities are working round the clock to make sure that mining companies are not affected in future.

"These are confidential matters between miners and their bankers. We do not have details of the amounts involved."

Zimbabwe has blamed global embargoes for its two decades economic crisis, but its adversaries argue that sanctions are only targeted at a few elites.

In one of the indications that government has also felt the pinch, the Reserve Bank of Zimbabwe (RBZ) last month shifted to the payment of mining fees and commissions to the Zimbabwe Revenue Authority.

RBZ governor John Mangudya said this was part of strategies to improve the ease of doing business.

"The bank has received numerous requests from mining exporters on the need to continuously improve the ease of doing business arising from complications around payment of fees and commissions to the Minerals Marketing Corporation of Zimbabwe," Mangudya said.

"To make payment of statutory deductions easy for exporters of minerals, with immediate effect, all commissions and royalties that are due will no longer be deducted by MMCZ.

"All applicable taxes shall now be paid to Zimra in the normal manner."

Washington's decision has left several mining companies in a lurch, with some even considering suspending operations until there is a solution.

This has crippled the entire mining sector, upon which Mnangagwa is pinning his hopes for economic revival.

The government is hoping to grow the mining sector to US$12 billion by 2023.

One miner told Standardbusiness that the situation had become desperate.

"We were supposed to pay our workers by May 25, but we failed because the money that has been withheld was for salaries and other running costs," the miner said.

"It is a major challenge.

"If this situation persists we will have no choice but to suspend operations because it means we can't buy consumables such as explosives and workers cannot come to work on empty stomachs."

The miners have approached RBZ.

MMCZ general manager Tongai Muzenda recently told the media that the parastatal had suffered as a result of the sanctions.

"We are feeling the impact of sanctions big time; the embargo is making it extremely difficult for us as the country's mineral marketing arm in the sense that anything in terms of trade that we want to do using major currencies like the United States dollars, we are constrained," he said.

Source - the standard

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