- February 27, 2019
- Posted in NEWS
Yesterday the Zimbabwe Miners Federation (ZMF) National Chrome Representative Mashonaland Central ZMF chairperson Masango Mahlahla presented a seven point grievance list at the ZMF MONETARY POLICY REVIEW BREAKFAST MEETING attended by Ministry of Mines led by Deputy Minister Polite Kambamura and the Reserve Bank of Zimbabwe (RBZ) led by William B. Manhimanzi following the new monetary policy presented last week at a meeting held at Rainbow towers’ Harare International Conference Centre (HICC) in Harare.
Rudairo Dickson Mapuranga
According to Mahlahla, miners were of the view that RBZ would be using the exchange rate which was being offered at the parallel market and were hopeful the policy presentation was long overdue, however, RBZ failed to reach miners expectations when they failed to adhere to market forces.
“As the ZMF National Chrome Representative, we are advocating for 80% USD and 20% RTGS valued at the current market rates, taking into consideration the country’s need for foreign currency to support industry and commerce, market rates were noted to be rated between 3.5 and 4 by the RBZ Governor in his new monetary policy speech last week. Additionally we are advocating for a review of the 30 days retention policy upwards to 6months to one year. Our expectation as chrome miners was that the RBZ would start the exchange rate at the current parallel market rate of 3.5 to 4. As the RBZ formalized the trading of RTGS to USD, the market would then receive the steady supply of foreign currency which in turn would reduce the gap in value between RTGS and USD overtime. In this case the start rate of 2.5 was too aggressive and immediately negatively impacts our business operations” said Mahlahla.
Mahlahla said that, it is high time the mining sector is transformed from being dominated by the small scale semi-mechanized operations and grown to fully mechanized operations as growth in the sector is too vital, he also lamented over USD retention because equipment purchases and rentals are still paid in USD.
“Our Equipment is imported and priced in Foreign Currency. In order for small scale miners to grow and increase production and efficiency we need to move our operations from being semi-mechanized to fully mechanized through the purchase and ownership of mining equipment such as, Dump Trucks, Front End Loaders, Excavators, Bulldozers et cetera” said Mahlahla.
It is the miners’ view that for the development of the mining sector, each piece of equipment can cost over $300,000 USD new and on average a used piece of equipment can cost around $100,000 USD each. Most small scale chrome mines are critically undercapitalized and require the access of sales proceeds in the form of foreign currency in order to grow operations. Masango Mahlahla said that the only solution towards turning the mining sector to a favorable outcome is by increasing foreign currency retention.
“Due to the challenges faced within our economy which includes conflicting government business policies, foreign banks as well as domestic banks are unwilling to loan money to chrome miners who have very low foreign currency reserves within their bank accounts. Having high retained foreign currency cash reserves within a miners bank account will enable a miner to make strategic purchases and even obtain loans” said Mahlahla.
Mahlahla pointed out that, ZMF is in support of the Ministry of Mines and Mining Development to promote formalization of mining as well as best business practices, however, there is a need for strong financial management.
“The 30 days retention will push miners to make rushed spending decisions and lose out on strategic purchases which can only be obtained when a miner has the foreign currency available in the bank on short notice. The thought that preowned mining equipment can be purchased internationally under our current economic environment along with conflicting business policy challenges via payment plans is not a realistic assumption” he said.
Experts believe that chrome production growth is further being suppressed due to the collusion by foreign buyers who have setup domestic buying operations. All buyers are now activity working together to keep chrome prices artificially low. Whereas the current export sales price of chrome is around $85 USD per tonne the buyers are paying as low as $12 USD per tonne.
“We as chrome miners are requesting RBZ and the Ministry of Mines and Mining Development to investigate the domestic Buyers and to cancel all export and business licenses of any buyer found to be predatory buying chrome. New Buyers should be invited in who are willing to conform to Zimbabwean business laws and pay international market based prices in order for our industry to grow’ Mahlahla said.