Selling Mineral Resources in Zimbabwe: Legal Insights
By Mwanatsa Masona and Ndana Moyo
Zimbabwe is richly endowed with over forty 40 different minerals and precious stones. Some require highly specialized equipment and technology to extract while others can easily be extracted with very little equipment by artisanal miners. While large scale miners may be well informed about processes and markets for their bounty, the same cannot be said about small scale and artisanal miners, who according to recent reports, are likely to smuggle the bulk of their minerals. This issue seeks to inform all miners in general on the legal framework governing sale and exportation of minerals in Zimbabwe. From a legal perspective, the framework and processes are quite straightforward and with the right information, there is no reason for miners, (large scale small scale or artisanal), to shy away from selling their precious minerals through established channels
The Legal Framework
The Minerals Marketing Corporation Act [Chapter 21:04] is the principal legal instrument establishing the Minerals Marketing Corporation of Zimbabwe (MMCZ), and gives it the sole mandate to market and sell all minerals extracted in Zimbabwe, except gold (and silver), which must be sold to the national reserve bank subsidiary, Fidelity Printers and Refiners (FPR). By this Act, no person (legal or natural) is permitted to sell any minerals except when selling to the Corporation or through the Corporation. The Corporation therefore works as an agent or middle man for all persons who wish to sell their minerals in Zimbabwe or outside the country. The Corporation is empowered to negotiate the contract of sale on behalf of the owner of the minerals. The same principle applies to people who wish to export minerals from Zimbabwe. This consolidation is meant to account for the country’s minerals and to assist small scale miners with logistics and marketing of their produce. The minerals referred to in this article exclude rough or uncut diamonds, or rough or uncut emeralds or any other substance. For more information regarding to their sale one must refer to the guideline’s set out in the Precious Stones Trade Act [Chapter 21:06]. The sale of gold is also regulated by the Gold Trade Act [Chapter 21:03]. We shall explore both the Gold Trade Act and the Base Minerals Export Control Act [Chapter 21:01] at another time under this publication.
The first step is to write to the Corporation, detailing the specifications of the minerals to be sold, that is, the type; the grade; place of origin and all other relevant details that a potential purchaser might want to know about. One must also put together a proposal with his desired Terms and Conditions for the envisaged sale or proposal. The Corporation may request for further information and particulars from the seller prior to initiating the sale or export process. Thereafter the Corporation will market the minerals for sale in a bid to either sell the minerals or purchase the minerals in accordance with the sellers’ desired terms and conditions. If all else fails, the Corporation is at liberty to authorize the Seller to sell the minerals as he desires or to sell the minerals subject to terms and conditions that the Corporation would have imposed.
Can you hold the Corporation liable in case the sell does not go as planned?
According to the Act, the Corporation shall not be liable under any of the contracts it negotiates or authorizes unless the contract in question provides to the contrary.
Can one negotiate their own contract of sale or export minerals without using the Corporation as an agent?
Yes! Companies or individuals may sell or export minerals on their own terms and conditions with permission or approval of the Corporation. There is a procedure to be followed to obtain the Corporation’s approval and therefore there is need to consult specialized business consultants or legal practitioners for assistance and guidance. In fact, in 2021, following a decline in gold exports due to Covid 19 and suspected smuggling among other issues, the FPR announced its intention to allow large scale miners to export their gold directly to gold markets. The move was anticipated to increase producer’s access to private funding through gold loans, increase production and discourage illegal export of gold by small scale miners.
Proceeds of the sales conducted by the Corporation
Ideally, the Corporation would receive all proceeds of the sales it would have negotiated or authorized, as per provisions of the MMCZ Act. After making all necessary deductions the Corporation would then remit the balance into the Sellers account. However, following the economic sanctions imposed on MMCZ, the mandate to collect royalties from the sale of minerals was transferred to ZIMRA, in place of MMCZ.
What are the legal implications for failure to comply with the export and selling laws?
There is no doubt that some individuals and businesses continue to undermine and circumvent legal channels of selling their minerals by engaging in smuggling and other nefarious activities. However, should one be found wanting, they will be liable to a fine or imprisonment for a period not exceeding one year. There is also a possibility that one might lose their mining license, depending on the gravity of their offence.
*The information provided in this article does not, and is not intended to constitute legal advice; instead, all information is for general informational purposes only.
Contributors: Mwanatsa Masona, Legal Practitioner, Mining, Energy and Infrastructure Department, Mushoriwa Pasi Corporate Attorneys
Ndana Moyo, Pragmatic Corporate Consultancy, Rare earth elements