Zimbabwe Chrome Producers laments over government’s failure to implement a solid policy on chrome buying and pricing which has enabled cartels to flourish, the organization which advocates for an open market system which promotes international pricing along with policies which promotes business integrity, quality control, as well as business growth for indigenous value addition laments over the current scenario where value addition is performed by foreign owned or controlled companies.
Rudairo Mapuranga
According to Masango Mahlahla one of the founding members of the Zimbabwe Chrome Producers, one of the major challenges faced by small scale indigenous chrome industry is the lack of a solid policy which helps to facilitate industry growth. As a result growth within the sector is taking place at the long term detriment of the indigenous small scale miners as both domestic and export sales take place in a market which lacks transparency (no published pricing model) and has no analytical oversight with enforcement powers to help identify and address predatory buying.
Mahlahla further went on to say that, predatory buying on the domestic market is of major concern as buying prices are as low as $12 USD per tonne is prevalent as chrome buying cartels have been formed to suppress the domestic sales prices while preventing new buyers from entering the chrome market.
The transportation industry according to Mahlahla is also impacted as chrome buying cartels threaten to cancel contracts of local transporters who offer their services to competitor buyers attempting to enter both the domestic and export market.
According to the organization, the Export market is negatively impacted by the weak mineral policies on chrome. Chrome buying cartels are systematically increasing logistics costs as few transportation companies are available to support the industry. This is done to systematically block new buyers from entering Zimbabwe’s chrome market ensuring that the cartels continue to dominate the market. This therefore bleeds the market dry of foreign currency earnings as most foreign currency remains in foreign hands.
Another critical negative impact of the low buying prices according to the organization is that it leaves small scale miners undercapitalized and unable to efficiently increase production. Noticeably absent from the mineral market is the aspect of mineral financing via banking as well as the insurance services designed to cover mineral transactions. Internationally both are key to facilitate trade in both domestic and export markets.
Zimbabwe Chrome Producers also laments over foreign currency allocation to chrome producers in Zimbabwe which they say is not viable for business.
“Foreign currency availability for equipment purchases and maintenance upkeep on equipment is also of key concern. The current RBZ allocation of forex disempowers our indigenous miners as miners require foreign currency to reinvestment back into their operations, Chrome mining is a capital intensive industry where a single piece of equipment can cost over one hundred thousand United States Dollars” said Mahlahla.
In response to the Ministry of Mines industry’s policy requirements, the organization drafted a chrome Producers Policy which was presented to the Ministry of Mines and Mining Development for review on March 5th 2019. The organization is waiting for follow up meetings with the Ministry to further discuss implementation. It is the organization’s expectation that by implementing the proposed policy, Chrome Producers will experience sustainable growth which will enable our indigenous Chrome Producers to enter the value addition industry.
“We believe the policy will also address both the future domestic consumption needs while rapidly increasing production to support increased exports to help generate the much needed foreign currency required to grow both the mining industries as well as our nation’s economy as a whole” said Mahlahla.