via Gvt cracks whip on miners Sunday, 24 November 2013 Sunday Mail Reporters
Government through the Ministry of Mines and Mining Development, has set in motion comprehensive reforms to ring-fence the mining sector by summoning diamond mining companies operating in Chiadzwa to explain why revenues have been low.
There are also elaborate plans to re-organise informal gold miners (makorokoza) by de-criminalising and empowering them with training and equipment while they channel the mineral to the State.
The measures are meant to boost revenues to the fiscus in line with Government’s new economic vision, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation(Zim Asset), which is Government’s blueprint for the next five years and identifies mining as a critical sector.
The imminent establishment of the Sovereign Wealth Fund (SWF), which will largely feed off royalties and dividends from the mining of minerals such as gold, diamonds, coal, black granite, platinum, coal and coal-bed methane gas, is part of broad measures prompting the reforms.
It is envisioned that resources that will be pooled in the Fund will be ably deployed to support critical Government institutions such as Agribank, the Infrastructure Development Bank of Zimbabwe and the Small Enterprises Development Corporation (Sedco).
International financial institutions such as the International Monetary Fund and the World Bank are reluctant to extend financial support to Zimbabwe. As part of local reforms to plug leakages in the mining sector and maximise revenue generation to the fiscus, policymakers are exerting pressure.
The Deputy Minister of Mines and Mining Development, Engineer Fred Moyo, said in an interview last week diamond miners working in Marange have been summoned to explain why they have been failing to meet set targets.
Government also expects the gem miners to submit concrete plans for production of diamonds before the end of this month.
The boards of the Zimbabwe Mining Development Corporation (ZMDC) and the Minerals Marketing Corporation of Zimbabwe (MMCZ) are also set to be revamped soon.
“We are worried that the diamond sector announces forecasts that they are unable to meet. It is clear that we are not producing efficiently. So, our board members whom we put in there should be liable. The production targets are not being met and there is the issue of capital, mine planning and geological matters. Some things are not being done right. There seems to be a tendency there to explore as they mine,” he said.
“We have therefore asked them to give us forecasts in line with Zim Asset. We expect to get concrete figures. We are expecting the figures by the end of the month and we hope that this time the figures will be sound and achievable. If there are challenges, whether to do with equipment or otherwise we want them to spell out clearly how we can address these.
“The Boards for ZMDC and MMCZ are not fully balanced and they will be revamped soon in line with our vision.
“The mandate of the board to support Zim Asset is more demanding. So we need to make sure that we have got robust skills there,” he added
He said the ministry has also issued a directive that all diamonds that are being exported should be cleaned first to enhance their market value.
“All along we have selling our diamonds without cleaning them. It was like selling a maize cob without peeling it off. The cleaning of diamonds is a simple process that will enable us to have more bargaining power when we sell,” he said.
Officials from diamond companies operating in Marange last week said they are ready to meet Government but refused to shed more light on the concerns raised arguing that it would be premature to do so.
Meanwhile, platinum miners will soon be compelled to refine their ore at local plants following the call by President Mugabe to ban platinum ore exports.
It is believed that billions of dollars in potential revenue is being lost annually through the export of ore, while other countries are directly benefiting through adding value to the minerals.
Also plans are being rolled out to transform thousands of illegal gold panners into organised syndicates to ensure that the bulk of the country’s gold is channelled into the main stream through Fidelity Printers and Refiners.
Eng Moyo said under the new dispensation, the former Makorokoza (informal gold miners) will be organised into groups of at least 20 people operating in a radius of 50 kilometres.
The re-organisation will precede the establishment of Gold Centres that will create a commercial hub and generate positive spin-offs such as employment creation for communities.
“We have made substantial headway in the regularisation of illegal gold miners and we expect that the programme will be in place by January next year.
“The syndicates will operate in a radius of 50km. Government will provide them with all infrastructure necessary for them to mine and process their gold and sell to Fidelity.
“This will be done at the very least, in each province and we expect to have at least 1 000 people doing work at each centre where there will be a gold mill where the miners will supply their gold. The Gold Centres will be commercial hubs where economic activity will be taking place to uplift the standards of living of the people,” he said.
Eng Moyo said the Ministry is forfeiting mining claims from individuals that are holding the sites for speculative purposes as part of the “use it or lose it policy”.
“The Ministry is in the process of issuing forfeiture notices under Section 272 of the Mines and Minerals Act (Chapter 21:05) under the use it or lose it principle.
“There are some companies and individuals who own up to 500 claims and some of them are only holding on to the claims for speculative purposes and we will address this by giving the claims to small-scale miners whose operations will be formalised under a new system of syndication,” he said.
In the platinum sector, Government has begun talks with the three companies that are mining the resource – Zimplats, Mimosa and Unki – to start processing part of the Platinum Group of Metals (pgms) at Empress Mine and Bindura Nickel.
According to Eng Moyo, the ban of platinum exports will be effected soon after consultations with stakeholders in the sector.
“The Government is very frustrated by what is taking place in the platinum sector because we do not know for certain how much we are getting or how much we are losing because platinum is a group metal that contains several other minerals.
“However, we are moving with speed to address the anomalies. To kick start the process, we think we can process the PGM’s at the two refineries here at Empress Mine and at Bindura because this will enable us to retain all the metals in platinum.
“As we speak, Empress is dealing with material that is coming from Botswana and Zambia. There is a team that is working on the feasibility of such an initiative in the ministry. The capacity should be there because Empress has the capacity to process some of the platinum ore.
“You basically take the platinum ore through stages where some of the base metals such as nickel and gold will be removed, while you remain with the main platinum,” he explained.
He further noted that this intervention would significantly shave the cost of setting up a local platinum refinery from the US$3 billion that was initially projected.
ZimPlats Head of Corporate Communications Mrs Busi Chindove said the Platinum giant fully supports value addition and has invested US$30 million for feasibility studies on the construction of the plant and is awaiting the conclusion of discussions that are being held with Government.
“Zimplats supports local value addition and beneficiation of minerals mined in the country. To this end, the company has invested US$30 million dollars in feasibility studies on setting up a refinery.
“This has assisted in understanding what is required in setting up a refinery including power and other infrastructure.”
On the issue of revenue leakages Zimra director for legal and corporate services Ms Flora Jambwa said although the revenue authority takes extensive measures to minimise leakages it does not administer the monitoring of contents of minerals.
“The Zimbabwe Revenue Authority (Zimra) undertakes a of initiatives to minimise revenue leakages. This is done in all sectors of the economy including the mining sector,” Ms Jambwa said.
“These include: tax audits and investigations in respect of complex transactions and research involving particular tax payers including those in the mining sector.
“In addition, Zimra is involved in monitoring of mining processes in conjunction with other Government agencies.
“Zimra collects tax revenue from the mining sector. The aspect of monitoring the contents of minerals is not administered by Zimra,” she said.