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10 things the government need to do to improve the mining industry

10 things the government need to do to improve the mining industry

The economy of Zimbabwe has become public discourse where expects have come to the conclusion that every Zimbabwean have turned themselves into economic analysts.

By Rudairo D Mapuranga

However, for Zimbabwe to be back to full economic recovery and growth many miners are of the view that the mining industry will contribute significantly to the transformation of the frugality of the country.

Mining Zimbabwe met mining personnel Masango Mahlahla who is of the view that the government needs to take 10 steps to build Zimbabwe’s mining sector and advance indigenous miner ownership from small scale production to large.

The two believe that there is an immediate need for Government to implement ten key points in order for the industry and economy of Zimbabwe to reach unpredictable outcome.

1. The publishing of real-time market based pricing for all minerals including gemstones

Hundreds of Millions of United Sates Dollars in Mining Industry Revenues are lost monthly in Zimbabwe due to the unavailability of Real-Time Market Based Pricing across all minerals and gemstones. The 60 plus minerals currently identified by the government must receive up to date pricing which is aligned to the international market to facilitate indigenous investment into our diverse mineral and gemstone market.

This will also enable the banking sector who also relies on pricing reports to support the sector via loan programs as banks cannot issue loans without being able to price or value the commodity to be mined and exported. Favorable export sales contract negotiations require Published Real-Time Market Based Pricing. Small Scale miners are vulnerable to predatory buyers across all minerals especially the Semi-Precious Gemstones as pricing is not widely known.

2. URGENT need for a large number of international and domestic buyers for all 60 plus minerals and gemstones

There is an urgent need for Government to attract a large number of international and domestic buyers to boost competition and break up the current mineral buying cartels currently operating in Zimbabwe. Having a small number of international and domestic mineral buyers has led to the establishment of cartels who operating under different names are artificially forcing low pricing which in turn supresses growth within a capital intensive mining sector. A Published List of Buyers along with current pricing is needed to help miners to plan their business investments and prevent predatory buying.

3. There is an urgent need to create a functional semi-precious gemstone market place

Government will greatly benefit from formalizing a semi-precious market or trade centre within the formalized market places: Miners will be able to display their semi-precious stones, receive valuation appraisals, while multiple buyers are onsite to competitively purchase the stones on display. Currently unfavourable transactions occur due to a lack of competitive buyers, often our semiprecious stones leave our nation to be sold outside of Zimbabwe on the informal market.

4. Urgent need for 100% allocation of foreign currency to miners on all mineral and semi-precious stone exports

Mining is heavily capital intensive with all machinery requiring foreign currency for both the purchase of parts and production equipment.

In order to promote indigenous miner growth all of the foreign currency generated by export sales is required for the re-investment into growth and maintenance of operations.

Currently small-scale mining operational growth is suppressed due to the inability to obtain foreign currency to upgrade, replace and maintain mining equipment.

With the recent move to ban companies from obtaining foreign currency on the parallel market, it is now critical to grant miners full access to the export foreign currency they earn via their own operation in order to ensure their businesses remain viable. The current Reserve Bank of Zimbabwe (RBZ) foreign currency allocation of foreign currency allocation to mineral exporters is not viable and has led to the idling of mines across all minerals. Gold, Chrome and other minerals have experienced drastic reductions in production and will continue to experience further decline until this urgent matter is corrected to allow for miners to manage their own foreign currency revenue generation.

5. Need for greater involvement of the banking sector to boost efficiencies in the processing of export documents

As per the prior miner challenges documents, RBZ noted a reduced export period to obtain CD1s in an effort to increase exports, as noted the times were supposed to be reduced to 48hours. However at MMCZ CD1 processing takes between 10-12 days to process and some miners have been made to wait 3 weeks for their export documents. Again this delay discourages exports from small scale miners as the finance cost accrues while the product is waiting at the mine for the export documents to be processed. Note all transactions are based on a prepayment further increasing the cost of purchasing from a small-scale miner further deterring repeat purchases by the buyer. As per international standards, Zimbabwean Banks should process the CD1 directly in order to greatly reduce the processing time and enable the foreign currency generated by the exports to enter the banking system.

6. Need for domestic & international financing options

Currently MMCZ does not accept letters of credit or other internationally recognized bank financing and export trade instruments.

In the case of buyers with strong banking relationships buyers should be allowed via RBZ to transact via their Pan African investment vehicles in order to secure long term contracts and consistent orders using the financing tools of international trade. One example would be to utilize the investment financing arrangements RBZ has with African Export Import Bank. In order to boost sector revenue growth, Government should allow our domestic banks to re-engage our sector and utilize financial instruments in order to facilitate international mineral and semi-precious stone export and trade.

7. Investment into mining production statistics

Investment must be made into statistical software or reporting to aid in the analysis of our mineral portfolios.

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This investment will allow Government to track mineral and semi-precious export growth and help to target minerals and semiprecious stones which need further program development and investment.

Current published statistical data is not sufficient to support Mineral and Mining Program Development and the lack of details discourages major investment into the sector by the Investment, banking and financing industries. It also places indigenous miners at a major disadvantage when seeking new mining investment as well during operational investment planning.

8. investment into weighbridge, logistical support, testing centers & centralized consolidation buying hubs

In accordance to sections 43 & 44 of the MMCZ Act, the following will provide strong support for the small scale miner’s sector growth across all minerals and semi-precious stones: Price Regulations of both the foreign and domestic market (Publishing Pricing).

The Establishment of Buying Hubs which would provide support and regional buying hubs within reach of buyers Encourage local Beneficiation of Chrome Ore & Base Metals (via the establishment of Micro Smelters and Smelter Tolling Arrangements) .

Support Logistics and the delivery of minerals to the end customer. Another challenge noted by miners is the extremely high VID weighbridge charges: MMCZ announced in 2017 that a tender was issued to supply weighbridges near the mining towns in order reduce costs from the current average of $7.27 per tonne or $240 per truck which includes reweighs. The hope was that the costs would come down to average $0.91 per tonne or average $30 per truck with reweighs.

9. Support the Zimbabwe Miners Federation formalization programs for ASM and Small Scale Miners

This will greatly increase the sustainable mining production of all minerals and semi-precious stones nationwide by indigenous miners while ensuring compliance to regulation and safety requirements. Equally important, it will aid towards our Nation’s 2030 target set by Zimbabwe’s President to become a middle-income earning country.

10. Partner with Zimbabwe Miners Federation & provide funding for equipment and operational management

ZMF via its affiliated associations is working to formalize and boost production of its growing membership across the nation. Government can fulfil its mandate of promoting production growth of the small-scale miner by providing operational funding to ZMF as well as by dispersing mining equipment and machinery via ZMF.

The structures within ZMF, consisting of miners provide the federation with a strong relationship base as well as an advanced understanding of the needs of the sector and its members making the Federation an effective resource to channel investment to successfully grow the sector. In addition to the formalization drive, there is a need to fund Mineral Identification and Mining Technique and Mineral specialization Programing.

This will ensure our local communities will benefit and exploit their own resources which are either currently being ignored or suffering from predatory buying due to the lack of knowledge of the value of the minerals and semi-precious stones found in the local communities. ZMF is embarking on such programs and requires government support and funding to successfully fulfil this undertaking as it works to boost provincial and national economic growth.

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