Govt mulls new mineral policy

By Golden Sibanda (01/06/10)

GOVERNMENT has started work on a new mineral development policy that spells out ways in which locals can leverage on mining titles to raise capital for exploration and new mine development, President Mugabe said on Saturday.

He also pointed out that he was aware of the capital challenges facing the mining industry amid substantial funds tied up in Reserve Bank of Zimbabwe bonds and promised Government would convert the debt into cash.

Addressing the 71st Annual General Meeting of the Chamber of Mines in Victoria Falls last week, President Mugabe said the policy should also articulate the symbiosis between large and small-scale mining of some ore bodies.

He said the new mineral policy would have to recognise the differing mineral depositions and formations as some lend themselves to small-scale mining.

The mining industry is key to the economy as it accounts for 50 percent of foreign exchange inflows and the latest research by the Chamber of Mines show that it now contributes 16 percent to Gross Domestic Product.

Firming metal prices, increased investment and improving economic conditions were expected to result in a 40 percent growth in the mining industry, the axis upon which a projected economic growth of 7 percent is pinned.

"I am informed the Ministry of Mines and Mining Development and the Chamber of Mines are working closely to come up with a new mineral development policy.

"The new policy must clearly spell out how locals can leverage their mining titles to raise capital for exploration and new mine development," said the President.

He said other minerals, such as platinum, did not lend themselves to exploitation by small-scale miners due to the "requirement of capital intensity".

President Mugabe said that since only small-scale miners could profitably mine some of the small deposits, Government required that this happen in an organised way.

"As a nation we do not want to end up as a hive of illegal panners or amakorokoza, as they are generally called. Even the small deposits must be worked in a professional manner which does not harm the environment," he said.

The new mining policy would also clearly spell out the strategy for beneficiation.

"Value addition to our minerals should be viewed within the context of an overall integrated national industrialisation strategy and not in isolation.

"It must consider the scale of operations necessary for viability. For instance, the objective of Zimplats is to establish a refinery, but this has to take account of the minimum scale of operations for long-term sustainability."

Commenting on the same issue, Chamber of Mines president Mr Victor Gapare said the new mineral policy would look at an array of minerals in the country and come up with a suitable development policy for each of them.

"The policy will look at the major minerals we are blessed with and come up with a development policy for each. We will look at beneficiation in the context of the overall industrialisation policy of the country bearing in mind that in most cases the value addition process is a very different business from mining requiring a different set of skills and investment strategy," he said.

In certain cases, the mining industry would look at expanding mine production first before setting out to build value adding processes and an example was platinum, which requires certain minimum volume to justify a refinery.

On the issue of funds tied up with the RBZ, President Mugabe said although the Government was financially strained, the Ministry of Finance would come up with a strategy to ensure mining companies do not lose out.

"Although Government is financially constrained, the Ministry of Mines will work with industry to come up with a comprehensive strategy to deal with debt and transform the debt into cash for mining operations," he said.

Gold miners are owed more that US$32 million by the central bank, which had been invested in the Reserve Bank’s Gold Bonds.

The Chamber of Mines’ 71st AGM, held under the theme "Rebuilding the Mining Industry for Sustainable Growth, Development and Empowerment", discussed wide-ranging issues threatening the sector’s growth.

Issues that were discussed included indigenisation and empowerment, capital constraints, skills flight, crippling power shortages and the increasing need for firms to invest in corporate social responsibility programmes.

The Government has also committed to help mining companies secure requisite capital to fund their operations, assist in attracting back essential skills, and to institute more energy sector reforms to lure investment into the industry.

A number of new power projects are pending and these include expansion of Hwange Thermal Power Stations 7 and 8, Kariba and the Batoka Gorge.

Zimbabwe is experiencing severe power shortage as it is current able to produce 900 megawatts against national power demand of just over 2000 megawatts.

Industry has called on Government to approve independent power projects to reduce the impact of power shortage on economic growth and recovery.

To provide further impetus to growth of the economy, said Mr Gapare, the Business Council of Zimbabwe has tasked the Chamber of Mines to lead the process to establish a national economic research institute.

The institute would be dedicated to economic policy research and analysis.