Zimbabwe Government Prods Executives to Slash Salaries
Written by Business Reporter
Zimbabwe Sunday Mail
2015/09/27
GOVERNMENT is currently goading executives of mining houses, particularly gold producers — whose salaries are thought to be accounting for more than 50 percent of the total production costs — to consider slashing their salaries and perks as a way of showing commitment to internally manage their costs.
It is believed that the King-sized perks being received by mining fat cats are the major cost drivers for most gold producers. A recent report by the Chamber of Mines of Zimbabwe (COMZ), a private sector industry representative body, indicated that salaries and administration costs constitute 50 percent of costs that are incurred in producing the yellow metal.
Some of the country’s major gold producers include Metallon Gold, which is the largest producer, contributing more than 30 percent of total production; Freda Rebecca Mine, which is owned by Mwana Africa; Blanket Mine and New Dawn.
Zimbabwe is producing gold at a cost of $1 200 per ounce ($43 per gramme) compared to Africa’s average of $878 per ounce (US$31 per gramme), yet the precious mineral is being sold at $1 100 per ounce on the international market, COMZ statistics show.
An ounce of gold is made up of 28 grammes.
Gold producers are mainly pushing Government to review electricity tariffs from the current US12,8 cents per kilowatt hours (kWh) to US6cents per kWh. The regional average is considered to be US8cents per kWh. Government wants the miners to realign their cost structures first.
Deputy Minister in the Ministry of Mines and Mining Development Engineer Fred Moyo told The Sunday Mail Business recently that the high cost of production in the sector was not sustainable.
“I have told the Chamber of Mines that before we as Government look at the issue of royalties and other expenses associated in the production of gold, they need to look internally the issue of salaries (sic). I have already told them to slash their salaries for their top executives, something the mines have agreed to.”
He noted that the strategic nature of gold production warrants continued intervention from Government to ensure that it is viable.
A paper that has been presented to Government by COMZ seen by this paper indicated that gold producers have since agreed to reduce their wage bill, negotiate price reductions with key suppliers and replacing contractors with in-house staff as part of sweeping measures to contain costs.
Explained Engineer Moyo: “They have provided me with information on their wage bill, but I have said I need the breakdown. For example, how much are the executives getting, your middle level and of course your general workers? What we are doing is to work with our mines to reduce the costs of production. . .
“These measures will assist producers to break even and sustain production and ameliorate the potential incidences of closure or placements under care and maintenance whose adverse implications on employment and revenue are far reaching.” Big gold mining houses are presently levied 5 percent in royalties compared to 3 percent in the region.
They want the fee to be slashed to between 2 percent and 3 percent. Small-scale gold producers, however, are levied 1 percent. Government also believes that miners have to invest in new technology in order to be efficient and competitive. Most gold producing countries are making profits despite the low prices on the international market owing to low cost of production.
Salaries and perks of senior executives in most local mining companies remain unknown as most of the entities are not listed. Metallon, for example, is a private company that is incorporated in the United Kingdom. Of all local gold producers, only Falgold is listed on the Zimbabwe Stock Exchange (ZSE).
A recent report on a survey of executive employment contracts published recently by Industrial Pyschology Consultants — a local consultancy firm — shows that most executives in the mining sector are on open contracts without limits. In July, PricewaterhouseCoopers (PwC) noted that South African executives, including those of listed companies, took home an average of $342 000 per year.
In Botswana, the average was $198 000, Ghana $191 000, Kenya $185 000, Namibia $262 000, Nigeria $292 000 and Uganda $152 000.
Tanzanian executives, however, bested their peers, earning on average $350 000 a year.
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Zimbabwe Sunday Mail
2015/09/27
GOVERNMENT is currently goading executives of mining houses, particularly gold producers — whose salaries are thought to be accounting for more than 50 percent of the total production costs — to consider slashing their salaries and perks as a way of showing commitment to internally manage their costs.
It is believed that the King-sized perks being received by mining fat cats are the major cost drivers for most gold producers. A recent report by the Chamber of Mines of Zimbabwe (COMZ), a private sector industry representative body, indicated that salaries and administration costs constitute 50 percent of costs that are incurred in producing the yellow metal.
Some of the country’s major gold producers include Metallon Gold, which is the largest producer, contributing more than 30 percent of total production; Freda Rebecca Mine, which is owned by Mwana Africa; Blanket Mine and New Dawn.
Zimbabwe is producing gold at a cost of $1 200 per ounce ($43 per gramme) compared to Africa’s average of $878 per ounce (US$31 per gramme), yet the precious mineral is being sold at $1 100 per ounce on the international market, COMZ statistics show.
An ounce of gold is made up of 28 grammes.
Gold producers are mainly pushing Government to review electricity tariffs from the current US12,8 cents per kilowatt hours (kWh) to US6cents per kWh. The regional average is considered to be US8cents per kWh. Government wants the miners to realign their cost structures first.
Deputy Minister in the Ministry of Mines and Mining Development Engineer Fred Moyo told The Sunday Mail Business recently that the high cost of production in the sector was not sustainable.
“I have told the Chamber of Mines that before we as Government look at the issue of royalties and other expenses associated in the production of gold, they need to look internally the issue of salaries (sic). I have already told them to slash their salaries for their top executives, something the mines have agreed to.”
He noted that the strategic nature of gold production warrants continued intervention from Government to ensure that it is viable.
A paper that has been presented to Government by COMZ seen by this paper indicated that gold producers have since agreed to reduce their wage bill, negotiate price reductions with key suppliers and replacing contractors with in-house staff as part of sweeping measures to contain costs.
Explained Engineer Moyo: “They have provided me with information on their wage bill, but I have said I need the breakdown. For example, how much are the executives getting, your middle level and of course your general workers? What we are doing is to work with our mines to reduce the costs of production. . .
“These measures will assist producers to break even and sustain production and ameliorate the potential incidences of closure or placements under care and maintenance whose adverse implications on employment and revenue are far reaching.” Big gold mining houses are presently levied 5 percent in royalties compared to 3 percent in the region.
They want the fee to be slashed to between 2 percent and 3 percent. Small-scale gold producers, however, are levied 1 percent. Government also believes that miners have to invest in new technology in order to be efficient and competitive. Most gold producing countries are making profits despite the low prices on the international market owing to low cost of production.
Salaries and perks of senior executives in most local mining companies remain unknown as most of the entities are not listed. Metallon, for example, is a private company that is incorporated in the United Kingdom. Of all local gold producers, only Falgold is listed on the Zimbabwe Stock Exchange (ZSE).
A recent report on a survey of executive employment contracts published recently by Industrial Pyschology Consultants — a local consultancy firm — shows that most executives in the mining sector are on open contracts without limits. In July, PricewaterhouseCoopers (PwC) noted that South African executives, including those of listed companies, took home an average of $342 000 per year.
In Botswana, the average was $198 000, Ghana $191 000, Kenya $185 000, Namibia $262 000, Nigeria $292 000 and Uganda $152 000.
Tanzanian executives, however, bested their peers, earning on average $350 000 a year.
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