Creating User Friendly Policies on Value Addition & Beneficiation of Metals
Edmond Mkaratigwa full address at the ongoing Zimbabwe Metals Casting Indaba 2021 at Harry Allen Golf Club in Bulawayo.
This is a unique event. An occasion that depicts realisation of who we are as Zimbabweans and a moment reflective of a time to unleash our prowess towards turning the fortunes of our country. We are an industrious people; creative, ambitious and hardworking. Indeed, necessity is the mother of invention, goes the old adage. The Indaba today demonstrates the seriousness that Zimbabwe has towards national self-help. We need to self-help, or we perish. The approach is two-pronged and that is working from within as we convince our friends and foes to come and join our economic building train. The globe is awash with evidence of those many states which have made it and we also have what it takes.
Esteemed Guests, as always, Parliament in its mandate, is ready to champion the cause for our country because by its nature, is a creature of the people, by the people and for the people. We are at a time that we have been awaiting such initiatives and as among the first ports of call, we are ready midwives, and we are ready to roll the dream into reality.
The mining sector has become the mainstay of the economy and in the past few years, it has been accounting for close to 70% of the country’s export receipts. It is estimated that the country is endowed with over 40 different types of minerals and this gives the country a comparative advantage and unique opportunity for developing world-class processing facilities for its minerals. You will find that there are some countries in the world such as Belgium, Japan and America which are not endowed with as many minerals as Zimbabwe but they own state of the art processing facilities for minerals imported from Africa and elsewhere. Sadly, you will find that Zimbabwe exports most of its minerals resources in raw form. This translates to the export of jobs and wealth from the country. This Indaba is concerned with value addition of base minerals and Zimbabwe has plenty of those that include, chrome, nickel, iron among others.
I understand this industry is coming from the backdrop of less government supportive policies, unskilled workforce, a depressed market activity. These challenges among others have been impacting timely supplies of products to the markets, in the right quantities and level of quality, as well as, and at competitive prices to consumers. This effectively sums up to a conclusion that the policy environment has not been very friendly to the sector.
The New Dispensation’s direction as is the case with every king’s business requires haste. Globally, the foundry industry production per plant has been led by Germany because of its advanced technologies although China has been leading in overall production quantities in terms of tonnage. As we are planning for take-off and noting the high demand for the product, high technological investment should lead to reduced noise during production, reduced emissions, limited toxic effluents, easy waste management and improved recycling. In addition, previously, energy supplies have been the challenge in the sector and in such platforms, we should find a way out of these challenges as is common knowledge that were there is a will there is way. Technology should further assist against the previous views that the sector is generally hard, dirty, low paying to the worker and dangerous to attract talented workers. This is also tied to supplies of requisite skills from our institutions such as the School of Mines and our Polytechnics among others.
I do not doubt that this is going to be a success and the market is wide. Previously, the cost of production has also been unsustainable and as a country, we need to look into those aspects so that the environment is friendly to the cause. Our youths need jobs and such initiatives are the answer. This opportunity is a window for policy advocacy and we should remain guided by those with expertise and practicing in the sector as that helps in troubleshooting for policymaking.
The National Development Strategy (One) highlights the need to promote value addition of several of the country’s minerals and will be achieved through the following:
- Securing investors for the various minerals in the country
- Establishing a base metal refinery in the country for the PGMs industry.
iii. Introducing beneficiation tax to dissuade exportation of concentrates and matte.
- Availing land for setting of chrome beneficiation facilities.
All these are noble ideas but it is important that the country comes up with a policy on value addition and beneficiation of our minerals. Just next door, South Africa has a beneficiation strategy of its minerals. This then helps investors and interested stakeholders to understand the opportunities and threats in the beneficiation of minerals sector. The policy will also guide the country in the crafting of laws and to integrate such a policy with regional and international policies on beneficiation, with include the SADC Industrialization Policy, the Africa Mining Vision among others. Both the SADC Industrialization Policy and the Africa Mining Vision call on African countries to promote beneficiation of their minerals, so as realize more wealth and create jobs for their countries. If you look at the SADC Industrialization Policy, under the Mineral and Beneficiation Cluster Zimbabwe has been called upon to beneficiate diamonds, platinum, iron and steel, so that as the SADC region we have a competitive advantage.
However, as a country our iron and steel industry is still limping. Over the past decade there have been plans to resuscitate Ziscosteel and we all remain hopeful that one day we would be able to get an investor. Nevertheless there have been strides to beneficiate some of the base minerals found in this country such as nickel and chrome. The platinum group of companies has also made investments in the establishment of a base metal refinery. All these are positive developments for the country. The major challenge is the lack of consistency and predictability in the application of policies on value addition and beneficiation of minerals. A good example is what happens with the chrome sector. You find at one time the Government announces that export of raw chrome is allowed and then at another time it is banned. Just a few months ago, in August, Government announced the banning of export of raw chrome in order to boost feedstock of the smelting companies. Such kind of unpredictability creates confusion particularly for would be investors.
Ladies and gentlemen, distinguished participants,
We are all aware that beneficiation of base metals require huge capital outlay, hence it is important that as a country we have a clear policy on beneficiation of our minerals. Right now the Mines and Minerals Act which is the principal law governing the mining sector does not have any provisions relating to the promotion of beneficiation and value addition of minerals. It is the MMCZ Act which has some provisions calling for the promotion of value addition of the country’s minerals. We are in the process of amending the Mines and Minerals Act, so this gives us an opportunity to include provisions which promote beneficiation and value addition of the country’s minerals. But first of all we need to come up with a policy or a strategy that will guide beneficiation and value addition of the country’s minerals. Right now we have the Diamond Policy of 2019; it calls for 10% of the diamonds produced in the country to be set aside for the local industry. A month ago, legislators visited one of the cutting and polishing centers in the country, Aurex which has state of the art equipment. The company is still growing and has been able to penetrate some markets in South Africa. This is what we want to see with all our minerals. They should leave this country as finished products.
It would be amiss for me not to talk about some of the reasons why beneficiation and value addition of the country’s minerals has been slow to take off the ground. Some of the challenges include;
➢ Lack of capital to establish processing facilities,
➢ electricity shortages,
➢ poor communication facilities,
➢ lack of adequate water,
➢ the poor rail network, NRZ is not yet fully operational to transport raw materials from mines to processing plants.
➢ lack of appropriate skills,
➢ access to international markets for beneficiated products,
➢ lack of funding for Research and Development.
A number of policy measures can be introduced to promote value addition and beneficiation of the country’s minerals. Such measures include:
- Offering incentives to companies based on local content of procured goods and services.
- Tax breaks and preferential treatment for access to foreign currency, for companies involved in beneficiation of minerals. Some mining companies have been given tax breaks for making investments into the country, through statutory instruments approved by Parliament.
iii. Reduction of electricity tariffs for beneficiation companies so as to reduce the cost of doing business.
- Giving national project status to companies involved in beneficiation of minerals.
In conclusion, the starting point is for the country to come up with a Beneficiation and Value Addition Strategy, to guide the industry. Other interventions such as tax breaks will be supported by policymakers as a way to encourage investment into the country. On skills transfer, we can always develop linkages with other countries so that we learn how they are doing it.
On behalf of the Portfolio Committee on Mines and Mining Development, and the institution of Parliament that deploys us to these particular Committees, I have identified a number of crosscutting issues that require cooperative action from all stakeholders.
We are here to serve and we are here to make Zimbabwe the best today and beyond. This initiative should serve Zimbabwe millions if not billions of dollars spend in imports. It is therefore important that we are all here and in our respective positions, vakuru vakati mbudzi kuzvarira pavanhu kuti itandirwe imbwa.
We were recently in Dubai and a lot of interest was generated within potential investors, for investment in the country. Zimbabwe need to follow-up with this kind of initiatives so that the momentum will not die down. For a truth, we are poised for growth as we maintain and improve in this drive.
I am here to serve and to unclog any policy aspects that may be thought as requiring immediate, medium term and longer-term support, to ensure industrial growth and sustainability in the country in line with His Excellency, The Commander of the Defence Forces, President Dr. E. D. Mnagwagwa’s vision.
I wish this industry great success and we are here to serve you.
Siyabonga!
Thank you!
Ndatenda!