RECENT LEGISLATIVE DEVELOPMENTS ON THE EXPORTATION OF BASE MINERALS IN ZIMBABWE

 1.1 On the 20th of December 2022 the Minister of Mines promulgated the Base Minerals  Export Control (Lithium Bearing Ores and Unbeneficiated Lithium) Order, 2022, Statutory Instrument 213/2022, (hereinafter referred to as “the 2022 Order”).  

1.2 The Order was issued in terms of section 3 of the Base Minerals Export Control Act  [Chapter 21:01] which empowers the Minister of Mines to issue orders prohibiting 

the export of all base minerals or of any specified base minerals from Zimbabwe  either generally or to any territory mentioned in the order; or to issue orders  directing that all base minerals or specified base minerals may only be exported  from Zimbabwe either generally or to any territory mentioned in the order in  accordance with a written permit.  

1.3 In terms of the 2022 Order, exportation of lithium bearing ores, or unbeneficiated  lithium from Zimbabwe to another country was prohibited except under written  permit of the Minister.  

1.4 Written permission of the Minister could be obtained in the following circumstances: 

1.4.1 upon a written application being made for exportation of samples of lithium  bearing ore or unbeneficiated lithium for assaying outside Zimbabwe; or 

1.4.2 upon production of written proof satisfactory to the Minister that there are  exceptional circumstances justifying the exportation of the lithium bearing  ores or unbeneficiated lithium and where the lithium bearing ore or  unbeneficiated lithium has been valued in terms of section 12 B(3) of the  Value Added Tax Act [Chapter 23:12] for purposes of payment of the export  tax on unbeneficiated lithium. 

1.5 The phrase “special circumstances” was not defined in the Base Minerals Export  Control (Lithium Bearing Ores and Unbeneficiated Lithium) Order, 2022. Ergo, the 

Minister of Mines had a wide discretion regarding the question whether there are  special circumstances warranting the issuance of an export permit to an applicant. 

1.6 Three Chinese companies which were in the process of building processing plants  in Zimbabwe were exempted from the ban. These could therefore continue to  export unbeneficiated ores without the need of the permit issued by the Minister in  terms of this Order. 

1.7 It is important to highlight that the 2022 Order did not apply to lithium  concentrates. What was barred is the exportation of lithium bearing ore or  unbeneficiated lithium. “Lithium bearing ore” was defined as any mineral ore  containing lithium. This is wide. Any ore that has lithium in it was barred from  export.  

1.8 “Unbeneficiated lithium” was defined as any lithium in whatever form that has not  undergone processing to an extent that would exempt it from the payment of  export tax under section 12B (“Collection of tax on exportation of unbeneficiated  lithium; determination of value thereof”) of the Value Added Tax Act [Chapter  23:12]. 

1.9 Section 12B of the Value Added Tax Act provides definitions of “unbeneficiated  lithium” and “unbeneficiated lithium petalite” for purposes of collecting tax on  unbeneficiated lithium exports. “Unbeneficiated lithium” is defined as lithium  exported for use in automotive or other batteries manufactured outside Zimbabwe,  or for the manufacture of lithium carbonate, or for any beneficiation outside 

Zimbabwe. The definition is most unhelpful but suggests that any lithium exported  for further processing, in addition to the lithium exported for use in automotive and  other batteries is regarded as unbeneficiated lithium for which tax is paid.  

1.10 The extent of the processing is not defined but reference to section 12B (5) gives  a hint. Section 12B (5) provides for an exemption to the payment of tax between  1st January 2020 and 1st January 2025 in respect of spodumene and chemical grade  petalite concentrate by operators in a special economic zone area. After this period,  petalite and spodumene concentrates will not qualify for exemption and will  therefore for purposes of the ban on exportation fall within the export ban. Those  outside the special economic zones are liable to pay the tax. The processing should  therefore be beyond simply producing petalite and spodumene concentrates.  

1.11 On the 6th January 2023, the Minister of Mines promulgated the Base Minerals  Export Control (Unbeneficiated Base Minerals Ores) Order, 2023, Statutory  Instrument Number 5 of 2023, (hereinafter referred to as “the 2023 Order”). The  2023 order was issued in terms of section 3 of the Base Minerals Export Control  Act [Chapter 21:01]. 

1.12 The Base Minerals Export Control (Unbeneficiated Lithium Bearing Ores) Order,  2022, published in Statutory Instrument 213 of 2022, was repealed in terms of  section 4 of the 2023 Order. The repeal however does not affect the validity of  anything done by the Minister under the 2022 Order. The exemptions to the three 

Chinese companies therefore stands. All permits, if any that the Minister may have  issued would also not be affected.  

1.13 In terms of the 2023 Order, the exportation of unbeneficiated base mineral ores  from Zimbabwe to another country is prohibited except under written permit of the  Minister of Mines. 

1.14 The permit by the Minister to export unbeneficiated base mineral ores may be  granted in either of the two instances below: 

1.14.1 the export of any unbeneficiated base mineral ore in respect of which the  applicant produces compelling reasons to the Minister showing that no such  ore is capable of being beneficiated to any extent within Zimbabwe; or 

1.14.2 the export of samples of any unbeneficiated base mineral ore for assaying  outside Zimbabwe, upon production of proof satisfactory to the Minister  that such assay cannot be satisfactorily done in Zimbabwe, and that the quantity to be exported for that purpose is necessary for that purpose. 

1.15 The following definitions are key: 

1.15.1 “Base minerals” means coal and all other minerals and mineral substances,  and includes coke and all such slimes, concentrates, slags, tailings and  residues as are valuable and contain base minerals as hereinbefore defined,

but does not include precious metals, precious stones, mineral oils and  natural gases. 

1.15.2 “Unbeneficiated base mineral ore” means any ore of whatever base mineral  that has not undergone processing within Zimbabwe to any extent. 

1.16 There are two key differences between the 2022 and the 2023 Orders. These relate  to the Minister’s discretionary power and the minerals which fall within the ambit  of the Orders. The differences are addressed separately below: 

1.16.1 The 2022 Order only prohibited the exportation of raw lithium or  unbeneficiated Lithium ore without written permission of the Minister.  However, the 2023 Order now prohibits the exportation of unbeneficiated  base minerals ore, including lithium, except with a written permit issued by  the Minister of Mines. What that means is that the prohibition now extends  to all base mineral ores and not just lithium. 

1.16.2 The Minister of Mines had a wide discretion regarding the question of  whether or not to grant an export permit in respect of lithium bearing ore  or unbeneficiated lithium under the 2022 Order. An applicant needed to  establish special circumstances to the satisfaction of the Minister in order  to obtain an export permit and the term special circumstances was not  defined. Currently, an applicant must establish compelling reasons showing  that the base mineral ore cannot be beneficiated in Zimbabwe to any  extent, in order to obtain an export permit in respect of base minerals 

ores. This suggests that for as long as there are facilities in Zimbabwe to  perform some form of beneficiation, an exporter would be expected to have  that ore processed in Zimbabwe to the extent possible before it can be  exported.  

1.16.3 With regards to samples for the purposes of assaying, under the 2022  Order, an application for an export permit for the purposes of assaying ore  samples outside Zimbabwe was almost ceremonial. No statutory  requirement was imposed in respect of such an application save for proof  of volume of the ore which the applicant intended to export for assaying.  The 2023 order on the other hand imposes strict requirements regarding  an application for an export permit for the purposes of assaying base  minerals ore samples. Under the current 2023 order, an applicant must  establish two things: 

1.16.3.1 proof satisfactory to the Minister that such assay cannot be  satisfactorily done in Zimbabwe; and  

1.16.3.2 that the quantity to be exported is necessary for that purpose. 

1.17 What is the import of the Base Minerals Export Control (Unbeneficiated Base  Minerals Ores) Order, 2023, Statutory Instrument Number 5 of 2023 on the mining  industry and Zimbabwe at large? In my considered view, it is clear that the Order  does not outrightly bar the exportation of beneficiated base minerals ores. One  simply needs to bring themselves within the ambit of the exceptions. With regards 

to unbeneficiated base minerals ores, one can only export in terms of a written  permit which is issued by the Minister if he is satisfied that the samples cannot be  assayed satisfactorily in Zimbabwe and also that the base minerals ores cannot be beneficiated or processed in Zimbabwe to any extent. The intention obviously is to  ensure that the beneficiation and value addition process is done locally to the extent  possible in Zimbabwe. However, this is only possible where the relevant  infrastructure is in place.  

1.18 The effectiveness of the 2023 Order in achieving the purpose or mischief behind  its promulgation is yet to be tested. The results however will depend on  implementation.  

Article written by Pauline Mwandura, an Associate at Wintertons Legal Practitioners. 

This opinion does not constitute legal advice and should not be relied upon as such. The writer can be  contacted at pauline@wintertons.co.zw