'Command mining could boost economy'

HARARE - Zimbabwe's move to introduce a “use it or lose it” policy for its mining industry and liberalise gold trading in a bid to boost output could lift the mining sector’s contribution to the country’s gross domestic product (GDP), experts have said.

After the successful implementation of the targeted command agriculture programme, government has expanded the project to include command mining.

The proposal is contained in a paper titled “Proposed Command Mining Initiatives” dished out at an annual meeting of the Chamber of Mines in Victoria Falls last week.

The white paper proposes to “implement the use it or lose it policy on mining claims (for) large mines sitting on unused mining claims.”

The government claimed unnamed large mines were “sitting on lots of unused claims.”

Mining has become the leading source of foreign exchange, with gold accounting for a third of exports, but political turmoil, lack of power and unfavourable regulatory rules has led to several mines closing over the past few years.

According to the Reserve Bank of Zimbabwe (RBZ), the mining sector contracted by 3,4 percent and 2,5 percent in 2014 and 2015, respectively. However, the mining sector staged a comeback in 2016, recording an estimated growth rate of 6,9 percent, supported by strong performances in gold and platinum production.

Gold production increased by 14 percent to an estimated 23 tonnes in 2016, while platinum production increased by 20 percent to an estimated 15 tonnes.

Although Zimbabwe holds the second largest platinum reserves in the world, the country only produces 6,8 percent of the world’s platinum output, according to figures from Statista.

Furthermore, Zimbabwe is rich in gold, but the country remains largely unexplored.

Cape Town-based NKC African Economics said: “The platinum and gold industries have immense growth potential, which could lift the mining sector’s contribution to GDP above the current 9 percent over the medium to long term.”

But veteran economist John Robertson warned that the Soviet-style command mining model has led to a precipitous fall in mining output in other jurisdictions where it has been tried.

This comes as government launched a $20m gold development facility for small-scale miners last September. The initiative aims to boost production, as well as formalise the processes in line with responsible gold mining standards.

Zimbabwe Miners’ Federation (ZMF) — representing small-scale miners — said they backed the government initiative which they claimed would “boost production.”

In March this year, the RBZ increased the gold support facility from $20m to $40m — encouraging small-scale producers to deliver more than 10 tonnes of gold in 2017.

This year’s gold production target was set at 28 tonnes after the gold industry delivered an estimated 23 tonnes of gold last year. Gold is currently Zimbabwe’s second largest export commodity after tobacco and accounts for a quarter of total formal employment in the mining industry.

Government is proposing revisiting the Gold Trade Act “to allow for the ease of handling and transportation of gold to buying centres” and speeding up mine registration are among other recommendations.

In platinum, Zimbabwe plans to build a $200m refinery next year in a joint venture with Australia’s Kelltech Ltd.

The government has been discouraging the exports of raw platinum ore through the introduction of a 15 percent tax on exports in 2015, a move aimed at incentivising more domestic value addition.

Fortunately, the levy was suspended until the start of next year after local platinum companies decided to cooperate and support the development of domestic downstream initiatives.

Considering other platinum projects planned thus far, Zimplats and Impala Platinum announced in November that the construction of the Mupani mine would go ahead following the completion of a bankable feasibility study.

The mine is expected to become operational by 2021, and at full capacity, could increase Impala Platinum’s reserves with 85 tonnes to around 255 tonnes by 2025.

The new mine is poised to create employment opportunities for 1 000 individuals.

Another large platinum project relates to the Darwendale development, a joint venture between the State-owned Zimbabwe Mining Development Corporation (ZMDC) and a consortium of three Russian companies — VI Holdings, Rostec and Vnesheconombank.

The $4,8bn platinum project, which was commissioned in September 2014, will run over three phases.

The first phase, entailing exploration, infrastructure development and commissioning of mining facilities, is scheduled to be completed this year.

The second phase will run from 2018 to 2021, establishing a new mine and expanding capacity to produce 15 tonnes of platinum per year.

The 6 500-hectare Darwendale platinum mine is billed to become Zimbabwe’s biggest platinum mine at the conclusion of the second phase of the project.

The third and final phase is planned for the 2022-24 period, and entails expanding the capacity of platinum production to 22 tonnes per year.

Comments (2)

There has always been command mining in Zimbabwe. They expropriated SMM from Mawere and used command mining and the mines fell down in short 2 years. ZMDC is a full fledged command mining structure wholly owned by the govt, but tell me which of their mine does well? none! what more command mining do you want?

Donato Matibili - 24 May 2017

Can someone educate me on this command thing? Where in the world has it ever worked?

Tahir Iqbal - 24 May 2017

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