Important priorities to a more progressive mining sector in 2020
Consequences of the Mining sector in Zimbabwe both small scale and large are very large especially in old mines, although all the people are on their heads up expecting an economic resuscitation led by the mining sector, the sector, however, seem to lack positive energy that can make it possible for it to solely reinvigorate the economy due to the prevailing socio-economic and political realm.
Rudairo Dickson Mapuranga
Taking a closure analysis of the mining sector in Zimbabwe it doesn’t take one to conclude that the potential of the sector into becoming the backbone of African economic reinforcement need to be detected by pushing for constructive policies that aim to the wholly functioning of the mining sector and conspicuously helping in both community development and fiscus returns.
The advancement of the mining sector in Zimbabwe into a competitive sector in both explorations, granting of prospecting licenses, mining environment (taxes and loans) and pricing of minerals should be prioritised going into the coming year for the country to improve in mining investments.
Many things need to be addressed going into next year for Zimbabwe to have a meaningful mining sector that has the balls to resuscitate the economy.
The following are points necessary for the sector to become a leading for in the nation’s redevelopment and growth.
Political correction
The political climate in Zimbabwe is very toxic and unhealthy for any meaningful business venture, there are extremely obvious differences in the political space. Elites sabotage each other on political grounds in the process disadvantaging national growth.
Despite fairly complex political and institutional challenges, many opportunities may facilitate an improvement in the governance of the mining sector, they may include among others,
(i) The shift – in power after these largely disputed 2018 elections to political dialogue between the two main actors, which may allow the government to explore practical ways of implementing its election manifesto and improving the economy through the mining sector;
(ii) Engaging large scale miners to review terms of their investment agreements and pay them on time;
(iii) The constructive initiatives from the Ministry of Mines and Mining Development, Chamber of Mines and Zimbabwe Miners Federation to initiate a dialogue and move towards development-friendly solutions.
Redollarisation
It is a well-known fact that for any economy to compete and be stable, money should be free-floating and tradeable. The money we have in Zimbabwe is indeed free-floating but at the same time, it is not tradable. By mid-July 2019 inflation had increased to 175 percent sparking concerns that the country was entering a new period of hyperinflation, the government has since stopped releasing inflation figures. The Zimbabwean dollar is not legal tender outside Zimbabwe which means that it cannot be regarded as money outside the country but just a paper.
Re-Dollarisation will help bring confidence at the same time stabilising business from unfortunate loss caused by hyperinflation. This will not only substantially decrease inflation and interest rates, but it will also contribute to promoting saving, investment, economic growth, and employment. It will, furthermore, stabilise the dysfunctional Zimbabwean credit system, enhance long term lending contracts and correct the misallocation of resources caused by hyperinflation.
Dollarisation will also enable the availability of loans for miners, since the money used, will be stable and sustainable.
Re-industrialisation
It is without a doubt that Zimbabwe is one the richest country in the world regarding mineral resources and is one of the leading exporting countries in respective resources. Industrialisation is associated with higher productivity growth and structural economic transformation and development.
Exportation of raw minerals has been regarded by many scholars as extremely dangerous and a blow to economic growth, mineral exports are negatively correlated with growth, but only for the relatively mature mineral-based economies and only for certain periods.
Zimbabwe is exporting all of its chrome raw to China and then import chromium steel from the same China, it should be noted that Zimbabwe being the host of chrome should just manufacture steel then export it to China.
There is a need, therefore, for Zimbabwe to move the mining industry beyond extracting and exporting raw materials but rather, use the revenue accrued in a strategic process of industrialisation and structural transformation.
Revise payment issues
The government needs to consider putting mechanisms to pay producers on time and giving small scale and artisanal miners once-off payment in cash, this will help reduce leakages and operational down times.
It is believed that the majority of gold mined by small scale and artisanal miners is being shipped away from the country through unscrupulous means thus it becomes important for the government to look into their payment systems and then consider paying miners considerable amounts.
Chrome miners in Zimbabwe have been complaining of predatory pricing unless the issue is solved the majority of chrome miners will underproduce and others shutting down operations until things stabilise, which means that the president’s USD12 billion road by 2023 will be disadvantaged.
Recently Bindura Nickel Company approached the government seeking foreign currency retention of not less than 80 percent and early payments from the country’s central bank.
Adhere to the rule of law
Zimbabwe’s constitution has been hailed as a very upright and democratic mechanism that dictates the transparency of decision-making processes and it is rich in determining the degree to which politicians are held accountable. However, the majority of Zimbabweans feel that the constitution is being largely neglected for the benefit of a few oligarchs. For example, recently Mutumwa Mawere through his Twitter handle accused the government of abusing the constitution and laws of the land to suit their gains.
Despite making progress in democratic consolidation and well organised 2018 elections, the challenges Zimbabwe is facing right now seem to be coming from a democratic point of view. Many people who were supporting the current regime turned back due to different reasons including renowned journalist Hopewell Chin’ono who accuses the government of its continual disrespectful of human rights. Perhaps some sector challenges are arising due to the remaining democratic weaknesses of the political field.
It is therefore important for the government of Zimbabwe to come to terms with the constitution of Zimbabwe and make strides that will effect change in investors and citizen attitude towards the government.
For example, regarding EPOs, the government should consider working towards revealing these EPOs to accommodate the small scale and artisanal miners. EPO holders must not be granted over 3year like it currently is so that actual mining can take place. The government should also raise taxes for an EPO holder after 1 year if it fails to gazette geological results for some of the lands under their exploration zone. The government needs to ensure that exploration does take place and at the same time production should not stop.
End corruption
Corruption in the mining industry in Zimbabwe is not well documented but too prevalent.
This year a forensic audit by Reynolds Tendai Muza, a forensic auditor and investigator with Ralph Bomment Greenacre and Reynolds unearthed massive corruption at Hwange Colliery Company Limited in which the Minister of Mines Hon Winston Chitando was implicated. Investigations by the Mines portfolio committee also exposed that the once-thriving mine was actually destroyed by very powerful persons, some of whom are currently serving in government.
Corruption is bad for business and it reduces investment, both foreign and local, therefore a direct insult to the “Open for Business” mantra, corruption will also hinder the vision towards a USD12 billion industry.
As the former United States, Vice President Joe Biden said “Corruption is cancer: cancer that eats away at a citizen’s faith in democracy, diminishes the instinct for innovation and creativity; already-tight national budgets, crowding out important national investments. It wastes the talent of entire generations. It scares away investments and jobs.”
Corruption in the mining sector needs to be entirely cracked down to create a conducive environment for all miners to work without fear or favor. According to Biden, fighting corruption is not just good governance, it is self-defense and patriotism.
The government of Zimbabwe needs to reduce the risk and incidence of corruption in the mining sector by improving the transparency of decision-making regarding granting of mining exploration and extraction licenses; public and stakeholder access to mining revenue information, including where companies are based and where they operate, and public disclosure of the payment and application of mining revenues.
Improving electricity and fuel supply
Due to the continued power cuts and fuel problems facing the country, the industry’s predicted growth might be thrown into an abyss of no hope.
Zimbabwe is experiencing serious power and fuel shortages which contributed significantly to the nation’s downfall economy.
Unstable power supply married with fuel shortages are a direct blow to mineral production, the government of Zimbabwe should, therefore, prioritise electricity generation and fuel availability to ensure that the economy of Zimbabwe doesn’t lack these needs.
Promote Exploration
It is a well-known fact that Zimbabwe is hamstrung by a lack of mining exploration, it, therefore, becomes important for the country to invest in exploration through Exclusive Prospecting Orders (EPOs) and Special Grants (SGs), however, the way EPOs are carried out should also be looked into in order to accommodate small-scale and artisanal miners.
It should, however, be noted that according to the Director of Geological Survey of Zimbabwe Forbes Mangubate the structure of the mining industry in Zimbabwe is highly skewed. There is a gap between thousands of small-scale miners and a few large mines. There are many small-scale mines with the potential to develop into medium and large-scale that’s where exploration should come in.
It should be noted that over 3000 gold deposits in Zimbabwe are known through ancient works than exploration.
Digitalise mining rights, title registration, and all payments.
Amidst reports of corruption, money laundering, externalisation and other unscrupulous behavior by mining personnel, all transactions which are mining-related in Zimbabwe need to be done digitally to avoid corruption and
Improve transparency.
The registration of mining rights and titles should be digitalised to improve administration and avoid double title allocations. There have been reports of disputes emanating from double title allocations, digitalisation will eliminate such issues with ease.
There should be an open to public geographical locations, ownership and time validity of mining rights and titles, mining rights and title registration and payment of registration fees should be digitalised for online processing.
Improve technical staff in the ministry of mines
The Ministry of Mines and Mining development has been accused of being slow in terms of addressing the grievances of miners. Some have accused the ministry officials of their desire to be worshipped for them to do the work they are paid for by taxpayers.
The ministry of mines technical departments are reportedly understaffed because of low salaries, hereafter the experienced staff leave for the private sector for example there is no geologist in Kadoma mines offices. Consequentially, the ministry hires those that are unskilled or those without adequate experience.
There are technical people in the ministry who have never worked on a mining project yet they make decisions concerning exploration and mining projects. It is reported that, best technical skills left the country in the past 20 years and continue to leave for greener pastures.
The ministry must hire competent individuals to professionalise the mining sector ensuring that the industry will achieve its 2019 production target.
For the mining sector to reignite the sector going into next year, it becomes important for the government to take into consideration the steps above for the country to improve in mineral production subsequently economic growth and see the 12 billion mining industry by 2023 come to fruition.
This article first appeared in the December 2019 Mining Zimbabwe Magazine