Gold miners seek $100m capital

HARARE – Zimbabwe’s small-scale miners say they require at least $100 million for recapitalisation and to boost production.

According to the Mines ministry, the small-scale miners contributed 30 percent of the total 13 tonnes of gold produced in 2012.

In 2005, Zimbabwe produced about 14 023 kg of the yellow metal with small-scale miners contributing more than 50 percent ? making them an integral player in country’s mining sector.

The resources sector ? which remains the major driver of Zimbabwe’s economic growth contributing an estimated 13 percent to gross domestic product (GDP) in 2012 ? is projected to grow by five percent this year, maintaining its position as the country’s fastest growing industry.

Edzai Kufandarerwa, the Zimbabwe Miners Federation (ZMF) national chairperson, said small-scale miners have huge potential but were hindered by their lack of capital.

“We are urging government to come up with facilities to avail capital to small-scale miners to help us enhance our operations.

“We will be most grateful if the mining industry loan fund can be revived so that small scale miners can be properly equipped to extract more minerals,” he said.

Last week, the Minerals Marketing Corporation of Zimbabwe said it expected mineral receipts to increase by about 500 percent in the next five years to $6 billion from the current $1,2 billion.

The State-run minerals marketing agency noted that it was currently in the process of engaging with small-scale miners to ensure that it meets its 2018 target.

Kufandarerwa however said electricity shortages, exorbitant mining levies and punitive policies are also having a negative impact on production.

“We are happy with what the ministry (of Mines) has done for us, but our appeal goes to financial institutions.

“Banks must understand that mining is a capital intensive business and requires long-term funding,” said Kufandarerwa.

Government last year raised the pre-exploration fees for most minerals by as much as 8 000 percent to discourage speculative holding of mineral claims which had become prevalent.

Nonetheless, the fees and levies were reviewed in March as government tried to accommodate the small-scale miners.

Zimbabwe has the world’s second-largest deposits of platinum and ferrochrome after neighbouring South Africa and also has large reserves of diamonds, gold, nickel, copper and coal.

However, despite its reputed mineral wealth, Zimbabwe has not always been top of the list as an investment destination for mining companies.

Industry observers say this is due to a perceived unattractive operating environment coupled with inadequate infrastructure, the government’s failure to listen to miners’ suggestions and of late, the controversial indigenisation law.

Chamber of mines immediate past president Winston Chitando said despite Zimbabwe being blessed with mineral resources, the sector was under attack from policies that hinder development.

He said the “economics” of the country need to be right if investors are to flood Zimbabwe and benefit the country.

“Mining companies need to operate profitably like any other company.

“But it is the economics of the country that must be correct if profits are to be achieved.

“Economics will determine the extent and level of resources to be extracted,” Chitando told the Chamber of Mines’ Annual General Meeting recently.

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