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Zimbabwe losing significant revenue from black granite in Illicit flows

By Lucy Tandi

MUTOKO, Zimbabwe – Despite being a global producer of black granite, there has been very little economic and social benefit to Zimbabwean mining communities who are receiving a fraction of the revenue generated in black granite mining while a significant amount generated is lost through illicit financial flows (IFFs), advocacy groups allege.

Black granite stone is mostly mined in Mutoko district, which alone contributes approximately 75 percent of Zimbabwe’s total black granite output.

But the face of Mutoko remains purely rural with no meaningful economic development and contribution to employment creation for villagers. In contrast, the Royal Danish Library in Copenhagen, Denmark, stands as an outstanding piece of US$82 million architectural mockery made mainly from Mutoko’s black granite.

Corruption, smuggling, lack of weighbridges, negligible royalties for rural district councils, coupled with lack of consideration for indigenous companies to take part in black granite mining have all seen government of Zimbabwe parcelling out Mutoko black granite mining for exploitation by foreign investors at the expense of locals.

The Mutoko black granite mining Special Economic Zone (SEZ) project granted to Surewin Investments in 2018 follows a series of mining concessions signed off to foreign companies.

Associations such as the Centre for Natural Resource Governance (CNRG) and the Business Economic Empowerment Forum (BEEF) have been advocating for Zimbabwe to give the first right of refusal to local companies for mega mining deals before considering foreign-owned companies.

“Reports say some of the black granite leaves the country undeclared whilst that which is declared is going out for a song. Politicians are receiving bribes to facilitate the looting,” CNRG Director Farai Maguwu claimed.

“What we are witnessing with this declaration of SEZ is that another company has been given considerable reign over our resources and it remains to be seen if it will be meaningful for Mutoko,” said CNRG Communications Officer Simiso Mlevu.

CNRG further alleged that government officials and politicians demanded donations from extractive companies which undermined its regulatory role, thereby promoting corruption.

“Consequently government ends up facilitating illicit financial flows by helping companies to avoid paying taxes because they pay politicians and government departments. Mining companies have thus become undeclared funders of political parties,” said Mlevu.

For more than two weeks, Mines and Mining Development Minister Winston Chitando has not responded to questions on measures the government has put in place to prevent smuggling of black granite from Mutoko, and the progress made in giving Mutoko a facelift since Chinese company Surewin Investments was awarded SEZ status two years ago.

No official comment could also be obtained from Surewin Investments as the company’s representative did not respond to questions and messages sent to him.

It is sad to note that Mutoko Rural District Council (RDC) is collecting only US$1 as royalties for every tonne of raw black granite mined in the district, a figure currently gazetted by government.

According to Mlevu, the price of black granite is between US$300 to US$462 per cubic metre. A tonne is approximately three cubic metres.

“Leakages occur when there is misclassification of the quality of the stone. Black granite is classified into first, second and third choice. So leakages happen when exporters make a false classification of the grade,” said Mlevu.

“Mutoko RDC is still getting an equivalent of US$1 per tonne. Some of the black granite is smuggled out of the country using the Nyamapanda border post. Also, the RDC does not have weigh bridges, therefore it becomes difficult to get value for the granite. I say this qualifies as IFF because it’s a structural problem designed by our leaders to prejudice Mutoko of its royalties,” said Mlevu.

However, while the level of looting is done clandestinely, no official figures could be obtained to quantify how much revenue Zimbabwe is losing per annum in illicit black granite mining.

‘I am sorry, no one has authoritative information on the exact figure Zimbabwe has lost in illicit black granite trade,’ added Mlevu.

Mutoko continues to suffer from the proverbial ‘paradox of plenty’ as the district is not benefitting anything meaningful from the lucrative trade.

“We are currently getting the pittance of a dollar per ton of black granite mined in Mutoko. We used to charge the same value during the dollarized era, which was not much but at least equivalent to a loaf of bread. However policies have shifted, leaving us in this predicament,” said Mutoko RDC CEO Peter Sigauke.

“When the RDC once appealed to the responsible Minister they were told to have dialogue with the company. Mutoko RDC is not allowed to review the levy,” said Maguwu.

Sigauke also revealed that one international company exported black granite for nearly two years without paying the development levy, by claiming that the granite slabs were samples that needed to be tested.

He however declined to name the company.

He said the RDC was not well placed at the mines to verify the weights given by the miners as they have no mechanism to check the actual production, leaving room for under declaring weight of granite mined, prejudicing not only the Mutoko district, but Zimbabwe as a whole.

“We are not located at the mines to verify the weights we are given by the miners. We have no mechanism to ensure that that’s the correct production,” said Sigauke.

The Chamber of Mines Zimbabwe (CoMZ) says Zimbabwe produced 223 356 MT of black granite FY2018 up from 161 123 MT FY2017.

According to the Minerals Marketing Corporation of Zimbabwe (MMCZ), Zimbabwe’s mineral exports FY2018 stood at US$1.65 billion and was projected to grow 9 percent FY2019. MMCZ said as at September 2019, Zimbabwe had earned close to US$2 billion from mineral exports, with black granite accounting for 0.84 percent of total mineral export receipts.

With an annual production of 200,000 MT, only five percent of the black granite is being processed in Zimbabwe, prejudicing Zimbabwe of revenue that can potentially be generated through beneficiation of the stone.

In March 2019, Surewin Investments director Mr Yao highlighted the Mutoko black granite project was expected to attract FDI to the tune of USD$20 million with an estimated revenue of USD$5 million per annum through local and export sales of value added granite rock products.

This story was produced by Lucy Tandi and was written as part of Wealth of Nations, a media skills development programme run by Thomson Reuters Foundation. More information at https://nam02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.wealth-of-nations.org%2F&data=04%7C01%7CGreti.Balazs%40thomsonreuters.com%7Ce086c046d20340b92f6108d88292dd96%7C62ccb8646a1a4b5d8e1c397dec1a8258%7C0%7C0%7C637402914574737910%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C1000&sdata=B4hSuXibtTIxSrgV9D8H8iwFhSBQrNg7Sqsx5EWIAzA%3D&reserved=0. The content is the sole responsibility of the author and the publisher.

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