The recent announcement of 100% local payment system had miners outraged. Miners were lamenting for price hikes from US$55/RTGS45 to at least US$80%/20% rtgs and being hit by a 100% local currency payment that’s losing value daily was a major drawback.
By 12 noon, the government had reverted back to the US$55/RTGS45 pricing system as the news to pay in 100% local currency was received with anger and guaranteed promises of not submitting to Fidelity.
Of all the conversations we had with small-scale and artisanal miners not even one expressed the will to shut down operations. The common response was snubbing submitting to Fidelity.
With the current economic state, the country needs to desperately boost its foreign currency earnings. The unpopular decision to pay in a currency that still lacks confidence was going to have dire consequences as it had caused panic and despondency in Zimbabwe’s top Industry. Whilst the move by the government to outlaw forex was to arrest the almost daily hiking of goods and services in RTGS, the market does not have confidence at all in the RTGS dollar.
We look at the reasons why Miners particularly small-scale and artisanal miners will never stop operations no matter how unfavourable government pricing is.
Alternative Markets
There is always a gold buyer with ready cash, ready to get gold and usually, that kind of buyer always has hard cash. In some cases, they also have rtgs/bond notes that will be at par with parallel market rates of which Fidelity uses bank exchange rates which are way lower. Most of these buyers smuggle the precious mineral out of the country where there is a ready market for them so the cycle goes on and on. Fidelity can easily get most of the gold (if not all) if they pay competitive prices. The government needs to have competitive pricing in place, otherwise, submissions will continue to dwindle.
Source of Livelihood
A report in 2014 stated Zimbabwe had approximately 500,000 artisanal miners. This is mainly due to the lack of jobs on the formal market. As such Mining is a source of livelihood to millions therefore depressed prices will not make artisanal or small scale miners abandon their source of livelihood. Many articles have been published of people getting into risky mines just to earn a living. Many mine disasters have had deaths of people from far off places. Eldorado Mine disaster that claimed 12 lives in Chinhoyi had people from as far as Shurugwi. For most miners, it is risky business and such risk should always be worth the rewards. Its only natural they will go to the one that pays better.
Stopping is just not an option
Earlier this year At Cricket and Silver Moon mines in Battlefields, the Environmental Management Agency (EMA) had raised a red flag over safety conditions at the two mines, but the warnings were ignored. People still went into the Mines which resulted in the death of over 30 miners. Those who escaped said they knew the mines were not safe however they still chose to get in and search for the precious mineral. They just cannot afford to stop as this will be a threat to their survival. At the Eldorado mine accident that also claimed lives, illegal miners offered to go down rescue the trapped bodies in exchange for permission to mine. This was despite the fact the mine had not yet been declared safe or inspected.
It is a well-known culture that when Makorokoza leave for mining they say their goodbyes and let their family know they may not come back alive. Going down the shafts has to be worth their while therefore they will always be attracted to the one that offers better returns.
Increase of Artisanal miners
Informal mining will increase as miners will refuse to be regulated with the fear of unstable government policies, so continuing operating as an artisanal miner government policymaking will not affect them at large.
Miners will not bother getting Legal Mining titles
Zimbabwe Miners Federation president Henrietta Rushwaya said that over 500 000 people are in the small scale mining sector, and only 30 000+ are operating legally which means over half a million miners are operating in Zimbabwe without any government binding. These miners are already operating illegally and therefore the sell of their production is also done illegally which then keep them in business even when the government errs in policies.
Minerals do not lose value because of bad policies
Zimbabwe is rich in mineral deposits and there is a huge appetite when it comes to the consumption of these minerals all world over. According to the Zimbabwe National Statistics Agency (ZimStat) minerals were the largest foreign currency earner in 2018. The largest earners were gold at $1,030 billion followed by other minerals. Miners will soldier on because the minerals market is strong outside Zimbabwe and there are people willing to risk their freedom to smuggle minerals out of Zimbabwe.
Conclusion
The decision to revert back to the 55/45% pricing structure is a welcome move. Reverting back to paying in our own local currency should eventually be done only when the economic climate has stabilised and confidence restored. Competitive pricing will always have Fidelity getting less and less even if miners mine more and more. The Ministry of Mines and Mining Development now has a highly experienced Minister at the helm perhaps it is time to liberalise Zimbabwe’s Top Industry.
