By Business Reporter
HARARE (Mining Index) – THE 2019 national budget spelt out a cocktail of measures aimed at improving the mining sector, with US$15.4 million allocated to the sector.
“It is critical that we move along with other countries in this agenda, and hence I propose to allocate US$15.4 million to the Ministry of Mines and Mining Development,” said Finance and Economic Development minister, Mthuli Ncube.
Mining has been shortlisted as an economic driver in building foreign currency reserves through mineral exports.
As Zimbabwe make plans to establish its own gold bank that will be as collateral when borrowing from international financiers such as International Monetary Fund (IMF) and World Bank, it is important to learn that countries that do not produce or refine gold have massive gold vaults used as a store of wealth, with the British central bank boasting of over 400 000 gold bars in its vaults.
The idea to establish a gold vault was first mooted by the Business Economic Empowerment Forum (B.E.E.F) president and businessman Solomon Matsa when he called on Zimbabwean business people to come together and establish a gold vault that will be used as a store of value, security and collateral when borrowing.
Zimbabwe owes US$680 million to African Development Bank (AfDB), over US$1.4 billion to the World Bank and US$308 million to European Investment Bank (EIB).
“The stability we have set to achieve over the immediate future will require that we build adequate foreign currency reserves, including gold reserves, that way providing anchor for preservation of exchange value,” said Mthuli.
Government noted the need to review foreign currency surrender requirements by mining companies to ensure continued production and operational viability across all key mineral producers.
The review comes after RioZim temporarily closed 3 of its mines (Cam and Motor, Dalny and Renco) in September this year following foreign currency shortages in which the mining giant failed to purchase consumable and spare parts.
Large scale miners now retain 55 percent of foreign currency from mineral exports to allow them recoup production costs, up from 30 percent of their export proceeds which they were previously getting, with the balance of 45 percent retained by government.
“The Reserve Bank has responded to the foreign currency supply challenges that had hard hit mining operations by reviewing downward the foreign currency surrender requirements thresholds for large scale gold miners to 45%, from the 70% which will see the miners retaining 55% of foreign currency earned,” said Mthuli.
The budget also made a provision for the development of Artisanal and Small-Scale Miners. In October this year, Fidelity Printers and Refiners (FPR) partnered the Zimbabwe School of Mines (ZSM) in a move aimed at capacitating gold producers on the fundamentals of mining in which FPR would provide funding for the training.
Government noted that it is critical to facilitate and incentivise mineral exploration. Recent exploration that confirmed oil, lithium and vanadium deposits in Zimbabwe were all done by foreign companies from Australia, Invictus Energy and Six Sigma Metals.
Resuscitation of closed mines has been made a priority targeting Shabanie Mashaba Mines (SMM), Elvington Gold Mine, Chegutu, Jena Gold Mine and other ZMDC mines earmarked to reopen in 2019.
“The resuscitation programme will involve own resources for some of the entities, while for others joint venture partnership arrangements will be pursued,” he said, adding that government will also deal with mining claims that are held for speculative purposes.
Value addition and beneficiation of minerals will be promoted through processing and refining of minerals in order to industrialise the country.
“In this regard, Government is finalising the Mineral Value Addition and Beneficiation Policy to improve domestic smelting and refining, to take advantage of the immediate scope for
income and exports generation offered by minerals such as platinum, chrome, lithium, nickel, diamond, copper, gold and coal,” he said.
US$1.7 million has been allocated towards implementation and automation of the Mining Cadastre Information system.
In order to move along with international best practices on achieving transparency in management of natural resources, government will soon become a member of the Extractive Industries Transparency Initiative (EITI).
Other programs gazetted include auctioning and rolling out plan for 22 assets under ZMDC, efficient and competitive mining tax regime, expediting transparent marketing of diamond stock pile under the Zimbabwe Consolidated Diamond Company (ZCDC) and plugging leakages in the marketing of gold, including implementation of a robust monitoring framework. ENDS//