Zimbabwe will in February adopt the free-on-board (FOB) and cost, insurance and freight (CIF) arrangements in selling minerals and metals, dumping the ex-works system as it moves to make miners realise more from minerals and metals.
Under the current ex-works marketing basis, miners sell their minerals and metals to buyers at the mine.
But, under the new arrangement, miners will now, through Minerals Marketing Corporation of Zimbabwe (MMCZ), ship their minerals and metals to the ports.
The new critical arrangement would also mean that the government gets more revenue from the sale of metals and minerals away from the mines, MMCZ general manager Tongai Muzenda said.
MMCZ is the country’s marketer and export agent for all minerals and metals, excluding gold.
Muzenda told Business Times that for a start, the FOB contract will initially be rolled out for chrome, manganese and granite.
He said the metals and minerals will be shipped to the different ports in the Southern African region where sales will take place.
“Over the years, we have been selling our metals and minerals on an ex-works basis, meaning we have been selling at mine and your prices at mine are much lower than away from the mine,” Muzenda told Business Times this week.
He added: “What we want to do is to have a minimum (price) of FOB, meaning (we need to sell minerals) from ports in Southern Africa. We even want to do better and do CIF to the customer.
“This development will happen next year, the latest we expect to roll out the FOB arrangement is February next year.
“We will start with products such as chrome, manganese and granite because these are what form the bulk of our mineral exports. We however cannot do F.O.B for small quantities, like for diamonds and gemstones, those we have to sell abroad, say in New York and Hong Kong.”
Apart from miners getting better prices and the government poised to get more revenue from the sale of metals and minerals, the MMCZ is also set to get better commission from the new contract, Muzenda said.
It is understood that local buyers were paying chrome miners as low as US$20 per tonne, way below the market prices.
The chrome mining sector has been largely dominated by Chinese companies since traditional players such as Zimbabwe Alloys started struggling. The local buyers are now said to be resisting the proposed FOB marketing system, maybe because they are likely to lose business.
Muzenda, however, said selling minerals to profitable markets such as New York, had been frustrated by the sanctions imposed on Zimbabwe by the United States.
MMZC was in 2008 placed under sanctions by the US Department of the Treasury’s Office of Foreign Assets Control as one of the entities which it said was “contribute to the undermining of democratic procedures and institutions in Zimbabwe.”
Muzenda said MMCZ would assume the transport and related costs from the producers to the destination ports.
“What we want to do is we want to work with the producer, as MMCZ we will find the financing, actually we have already got transporters willing to work with us. We don`t want to prejudice the miner, we just want the producer to have better value than they are getting now without them incurring more costs.”