Small-scale mining – the baby that needs serious attention
Artisanal and small-scale mining (ASM) has become an important sector in Zimbabwe, creating jobs for the rural communities, contributing to the country’s economic development, sustaining livelihoods among other important things.
But despite all this, the sector is not being fully supported in Zimbabwe especially in terms of funding and capacity building.
It is facing challenges such as gold marketing, lack of mechanised equipment and finance, perceived lack of recognition and consultation, high charges, absence of a clear mining policy that promotes small-scale mining and centralisation of mining services among a plethora of challenges.
In fact, the sector is drowning in serious challenges that need urgent attention for it to continue playing its role.
Why should the government pay attention to this sector?
A report by the International Labour Office (ILO) says small-scale mining needs to be supported because it helps to stem rural-urban migration, maintaining the link between people and the land and it makes a major contribution to foreign exchange earnings.
It also enables the exploitation of what otherwise might be uneconomic resources, and it has been a precursor to large-scale mining.
The report also says “small-scale mining can and should be encouraged by creating the operating environment that encourages the use of best practices for mining and occupational health and safety and environmental protection.”
The sector has become of paramount importance for the country to achieve its US$12 billion mining industry by 2023. The gold small scale mining sector is expected to contribute up to 12% of total exports.
Job creation
Globally, artisanal mining has grown from 10 million in 1999 to potentially upwards of 20-30 million, according to reports. This increase provides a rich policy ground for promoting a good job agenda. In Zimbabwe, more than 500 000 people are believed to be employed in this sector. Researchers also have estimated that the small-scale and artisanal mining sector in Zimbabwe benefits over 1,5 million people excluding equipment and service providers.
Rural development
Linked to the job creation is artisanal mining’s added value as part of rural livelihood diversification strategies where it is one avenue of income generation, another report reveals. Research has shown how artisanal mining assists rural households in building more dynamic and resilient livelihood strategies portfolios by, for instance, ‘dovetailing’ artisanal mining and farming economies. Further, it is a stimulus for trade and subsidiary business development around mine sites just as evidence in industrial or larger-scale mining operations, it said.
Source of revenue
Reports also say small scale mining is also a major producer of minerals indispensable for manufacturing popular electronic products, such as laptops and phones. For example, 26% of global tantalum production and 25% of tin comes from small scale mining.
On the global front, small scale mining is recognized as a considerable source of revenue for millions of people in about 80 countries worldwide.
In 2016, Zimbabwe’s gold mining sector as a whole, consisting of both artisanal and small-scale mining and large-scale gold mining, contributed 2.6% of gross domestic product (GDP), 18% of exports, 28% of mining output, and 1% of government revenues (royalties only) and employed 7.1% of the labour force. ASM is perceived to contribute significantly to these figures and, therefore, to the growth and development of Zimbabwe’s economy.
What does the government need to do?
The government can support the small scale mining sector through making payments on time, end Fidelity Printers and Refiners (FPR) monopoly, provide funding for small scale miners, proper formalisation among other interventions. These interventions are, however, not exhaustive.
Make payments on time
Fidelity Printers and Refiners (FPR), the country’s sole gold buyer, needs to reduce the turnaround time for payment of gold delivered by both large and small-scale producers. Currently, the turnaround time for payment is not sustainable. It forces producers to sell their gold in the black market.
In his 2021 national budget, Finance minister Mthuli Ncube acknowledged this and promised to rectify it. He said lead times will be reduced from maximum of two weeks to a week for large scale producers and on spot payments will be done to small scale producers from the current maximum lead time of five days.
End FPR monopoly
The southern African nation currently forces gold miners to sell their bullion to FPR and then it pays them 70% in dollars and the remainder in local currency. Parliamentary Portfolio Committee on Mines and Mining Development chairperson Edmond Mkaratigwa last year revealed that the current monopoly “is breeding inefficiencies within Fidelity and the black market is capitalising on these, for example, we are told in some cases Fidelity is taking up to four weeks to pay for deliveries and the miners are saying this is unacceptable.”
“So our view is that there is a need to liberalise the marketing of gold. Fidelity Printers should not remain the sole buyer of gold in the country in order to attract investment into the industry,” he said.
Gold output plunged 30% in the first 10 months of 2020 from a year earlier while exports of the precious metal slumped 23% to $697.7 million during that period, according to the Reserve Bank of Zimbabwe.
Hence, there is a need for the government to end the FPR monopoly over the marketing of gold in the country.
Make funding available
Small scale miners need to be supported financially. They need finance to kick start their dream projects and buy equipment, machinery and tools. Without these things, the sector is bound to collapse.
Refreshingly, Ncube hinted in his budget that he will introduce the Mining Industry Loan Fund which supports small-scale miners through prospecting grants, mining establishment loans, plant and equipment procurement loans, among others. He, therefore, capitalized the Mining Industry Loan Fund with 198.5 million.
As a way of conclusion, the government needs to pay serious attention to the small scale mining sector due to its contribution to the economy in terms of job creation, forex earnings among others. The sector should be supported also because it is drowning in challenges.
Without the government’s full support, the sector is bound to fail and for crying out loud government should invest in FORMALISATION.
This article first appeared in the December 2020 issue of mining Zimbabwe Magazine