- July 25, 2020
- Posted in LOCAL
FINANCE Minister Mthuli Ncube has said mining legislation needs to be reviewed in order to ensure transparency and curb leakages in the mining sector, enhance exploration of the country’s minerals, and computerisation of mining which is expected to solve issues of mining titles.
Ncube said this in the National Assembly last week during his midterm budget and economic review statement where he also said that the mining sector in Zimbabwe is now the biggest foreign currency earner at 60% of total foreign currency received.
While Ncube has emphasized on mineral legislative reforms, the stumbling block to a new Mines and Minerals Amendment Bill has been the slow pace in its drafting by the Attorney General’s office so that it can be crafted by Parliament.
The mining sector is said to currently contribute about 8% of total Gross Domestic Product and is expected to experience a boom of S$12 billion by 2023 from US$2, 7 billion in 2017.
However, he said mining currently faces a myriad of problems that include low production levels due to COVID 19, gold leakages due to pricing issues, closure of international ports, power and fuel shortages.
“Priority policy areas to attain this target and other Transitional Stabilisation Programme benchmarks include reviewing and updating mining legislation, enhancing exploration and investment in mining, modernisation, and computerisation of the mining title administration (mining cadastre), improving transparency in the mining sector and value addition of minerals to create more jobs and earn more foreign currency are priorities for the sector,” Ncube said.
He said due to COVID 19 impacts, and other challenges such as energy, the mining sector is projected to slow down by -4, 1%.
“Therefore, growth for the mining sector is now projected to slow down to -4.1% in 2020, reflecting the impact of COVID 19 and other challenges including perceptions around retentions, erratic power supply, and loss of skills in the mining sector.”
Ncube said the government will also deal with issues of mineral leakages that continue to deprive the country of substantial foreign currency inflows.
“Therefore, during half of the year and going forward, the budget will expend more resources on capacitating security institutions engaged in monitoring and curbing mineral leakages. This will also prioritise the Minerals and Border Control Unit,” he said.
For most minerals like chrome, coal, and nickel, Ncube said their production was affected by COVID 19, but coupled with other challenges such as power and fuel shortages.
“Chrome was affected by logistical challenges in South Africa under lockdown and closure of some docking ports considered unsafe in China due to the pandemic weighed down on raw chrome exports to China. Disruption of supply components and spare parts forced most smelters to gradually scale down operations and put plants on care and maintenance.
“Other challenges that include power and fuel shortages, high operational costs due to surging inflation also continued to weigh down chrome output,” Ncube said.
For coal, he said the 2020 output is projected at 3 million tonnes, constrained by reduced investment in exploration, shortages of fuel and foreign currency challenges.
“In addition, the (coal) industry players contend that low foreign currency retention thresholds (45%) for an industry which exports only 10% of the produce, is making it difficult for the industry to procure production inputs. This is in addition to other challenges that include fuel shortages and high operation costs induced by rising inflation, among others.”
The Finance Minister said coal output was about 417 000 tonnes in the first quarter of 2020 from two major producers and about 16, 6% more than production realized during the same period in 2019.
But he said the price of coal of about US$30, 30 per tonne was unviable and below the average cost of mining.
For chrome, he said the output in the first quarter of 2020 stood at 293 000 tonnes, about 30% lower than in the same period last year due to a steep decline in ferrochrome prices.
Ncube said diamond output in the first quarter of 2020 surpassed the same period last year by about 17% due to increased production at the Zimbabwe Consolidated Diamond Company (ZCDC).
“However, the subsector faces challenges on power supply, COVID 19 impact on production, demand, and hence depressed prices.”
For Gold, Ncube said gold prices underperformed due to increased leakages amid high production through smuggling and diversion of gold to the informal market arising from issues around retentions that have since been revised.
“Against this background, gold deliveries are projected at 27 958 kilograms for the year 2020, which is lower than the 2019 levels despite the favourable international prices obtaining compared to the previous year,” he said.
Ncube said the government will continue to engage mining companies including small scale miners on pricing and viability issues.
This article first appeared in the Mining Newsweek 20 July 2020 issue