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Mukasiri Sibanda's Blog

articles on mineral resource governance

National Discussion on ASM Developments

ASM National Dialogur.JPG

Mega mining deals being announced frequently can be attention grabbing, but Artisanal and Small Scale (ASGM) is strongly in the picture. Developments in the gold sector, where ASM gold production has surpassed large scale gold producers offers a timely reminder to policy makers that ASM sector is an important part of the mining sector. Remarkably, the ASM is pivotal to the empowerment of resource rich communities. Largely, the sector contributes to the resilience of rural economies in the face of erratic agricultural yields caused by increased climate change risks, droughts and floods.

Against this background, the Zimbabwe Environmental Law Association (ZELA) together with the Zimbabwe Coalition on Debt and Development (ZIMCODD) organized a national caucus meeting focusing on key developments in the mining sector, including ASM sector. Held at Crowne Plaza hotel, Harare on Friday, 11 May 2018, the meeting was attended by 56 participants, comprising of Community Based Organisations (CBOs), Civil Society Organisations (CSOs), artisanal and small-scale miners, media and govern institutions.

This article zeroes in on the discussion on developments in the ASM sector which was led by the Zimbabwe Miners Federation (ZMF) CEO, Mr Wellington Takavarasha.  According to Mr Takavarasha, the Zimbabwe Miners Federation (ZMF) represents 30 000 registered Artisanal and Small-Scale Miners (ASMers).  However over 1,5 million artisanal and small-scale miners are operating illegally. Below are key discussion points;

  1. ASM gold production has been growing since 2009.  In 2017 ASM outpaced large scale producers through contributing 53,3% to the total national gold output of nearly 25 tonnes.  This trend has continued in 2018, in the first quarter of the year, ASM sector produced 58,6% of the total gold output.
  2. Criminalization of ASM has been on the decrease.  In the new political dispensation ZMF has managed to have dialogue with the Office of the President and Cabinet (OPC) to stop the sporadic arrests of ASMers.  A positive development, as evidenced by a surge in gold production by ASM. There is need for a shift of mind-set in Zimbabwe, so that ASM is taken as a poverty reduction strategy and a source of livelihood for the people.  ASM should not be arrested for seeking to survive.
  3. Notable, ZANU PF in its 2018 Manifesto promises to recognize artisanal mining.  According the new Finance Act, ASM sector is reserved for indigenous players.  Ominously, the Mines and Mineral Amendment Bill does not recognize artisanal mining. Other countries such as Tanzania have developed policies that formalizes ASM.  
  4. According to the latest Monetary Policy Statement (MPS), $74 million was disbursed to 255 small scale miners in 2017.  This year, $150 million has been earmarked to support gold production in the ASM sector. Key questions that need to be interrogated is whether the loan facility is benefitting the ASMers who are in need.  Secondly, interrogation is needed to understand whether women miners have benefitted from the loan facility. 
  5. A cursory glance shows that the loan facility could have benefitted over 1000 syndicates given that on average, a mining venture requires about $20 000 to $30,000 as jumpstart capital.There is need to promote transparency and accountability in the disbursement of this loan to ensure that it is not abused and reaches the intended beneficiaries.
  6. Gender discrimination has been an inhibiting factor for some women miners. For example, in Inyanga, a traditional leader refused the Minister Muchinguri permission to set up a milling center for women. 
  7. There are many social challenges associated with ASM operations which include: violence through use of machetes, prostitution, early child marriages, degradation of the environment, drug and alcohol abuse.
  8. Youth are struggling to get funding for their operations, because of their unwillingness to organize themselves into syndicates.  Syndicates have a better chance of getting capital. 
  9. Several ASMers have been duped by suppliers who were paid under FPR’s gold mobilization fund because the suppliers are failing to deliver the paid equipment. Therefore, it is important for ASMers to conduct a due diligence to ensure that they work with genuine suppliers.  The FPR does not have the onus to conduct a due diligence on suppliers of equipment and machinery to ASM.
  10. Women miners raised concern that they were lagging in getting access to the loan facility set up by the FPR.  In response, Mr Takavarasha highlighted that there was serious competition for the loan and all applicants needed to be patient, as all applications were considered on merit. 
  11. Part of the gold from ASM is sold on the black market because banks and FPR take a long time to pay miners their money.  The black market pays 100 % in forex for the gold sold but this has many risks.  Firstly, machines used for weighing the gold can be wrongly calibrated to under weigh the gold. Secondly ASMers run the risk of being paid fake USD.
  12. There is need to enact the ‘use it or lose it policy’ in order for big mines to release ground for the benefit of new entrants in mining and for ASM to get access to rich gold deposits.  Currently most of the rich concessions are owned by large mining companies.
  13. To address violence among the ASMers, such as the use of machetes, ZMF has sought the assistance of the police and army in educating and raising awareness on the dangers associated with such practices.  There are still sporadic cases of the use of machetes in places such as Geiger in Kwekwe.
  14. Under the Zimbabwe is Open for Business Mantra, it is important for ASM to be taught how to negotiate and enter into viable contracts.  Otherwise they run the risk of losing their claims from unscrupulous investors. 
  15. There is need to balance the 10% export incentive offered to ASM gold producers with the interest of government to generate revenue and sustainability concerns.  The 10% export incentive should be accessed on condition that miners how proof that they are rehabilitating the environment. 
  16. Some of the policies hindering growth of ASM include burdensome provisions of the Environmental Management Act (EMA) Act.   The thrust is to have EIA provisions simplified to something of a check-list than to include technical terms in a language not easily understood by ASMers.
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Talking Points: Marange Diamond Mining Operations Under ZCDC

Conglomerate plant

New conglomerate diamond processing plant under construction: Picture courtesy of Nyaradzo Mutonhori

Introduction

Right from the beginning, the sunny side of Marange’s rich alluvial diamonds was obscured for many Zimbabweans. More so, to communities impacted by diamond mining activities, who have been subjected to counting the costs of mining and hardly counting any benefits.

Weighed down by a plethora of legacy issues- disregard of Free Prior Informed Consent (FPIC), water pollution, and no tangible community benefits from diamond extraction, can Zimbabwe Consolidated Diamond Company (ZCDC) deliver on its vision “to be a world-class diamond producer for the long-term benefit of Zimbabwe.”

With depletion of Marange alluvial diamonds, is there any glimmer of hope for conglomerate diamond mining? Can ZCDC, a government owned entity fair differently from other state-owned enterprise on corporate governance? What measures are being put in place to maximise national benefits from diamond mining? What is at stake for the communities affected by diamond mining activities? Is there a change on transparency and accountability in the management of Marange diamonds? Is military linked Anjin on its way back?

To help to connect the dots, this report is a summary of key developments related to diamond mining in Marange observed by Zimbabwe Environmental Law Association (ZELA) during the EU delegation of Ambassadors visit to Marange on 20 April 2018.

A timeline of key events which discoloured Marange diamonds

To start with, DeBeers’ involvement in seemingly unending diamond exploration activities in Marange is marred by allegations of massive diamond looting. DeBeers though is refuting the allegations. In 2006, there was a chaotic diamond rush which attracted thousands of artisanal miners; led by the army, the infamous “Operation Hakudzokwi” (You will not return), a violent crack on artisanal mining took place in 2008.

After the displacement of artisanal miners, government arranged several joint ventures entities to extract diamonds between 2009 and 2010. The contracting process was opaque. From close to 1 million carats in 2009, diamond production peaked to slightly over 12 million carats in 2012, Zimbabwe becoming the fourth world largest producer of rough diamonds after Russia, DRC and Botswana. Yet, peak diamond production did not commensurately result in increased tax contribution.

In 2015, the former President, Mugabe intimated that Zimbabwe lost $15 billion revenue from Marange. Zimbabwe Consolidated Diamond Company (ZCDC) commenced its operations in 2016 after the closure of all seven companies that were operating in Marange.

About ZCDC

Rob De Pretto, ZCDC’s new chief operating officer who has 32 years of mining experience led the presentation on strategic developments at the entity. Formed in March 2015, ZCDC started its operations a years later in February 2016. Register under the Companies Act, as a private entity, the company is 100% state owned. Reserve Bank of Zimbabwe (RBZ) is funding ZCDC operations through an $80 million support facility. Currently, ZCDC is mining diamonds in Chiadzwa and Chimanimani through its a special grant covering 755,000 hectares.

ZCDC’s vision is to be a world class diamond producer for the benefit of Zimbabwe. Because alluvial diamond mining activities are no longer economically viable, ZCDC has transited from alluvial diamond mining to conglomerate diamond mining. A development that pushes upwards production costs per tonne compared to ZCDC’s predecessors which were extracting alluvial diamonds. ZCDC alleges that the past diamond mining companies never carried out any exploration activities. A lot of drilling is therefore needed to evaluate the diamond resources.

Alluvial diamonds depleted, is there hope for conglomerate diamond mining in Marange

Conglomerate

Previous diamond mining companies did not carry out any meaningful exploration activities. Considering that alluvial diamonds are diminishing, ZCDC is undertaking exploration work on conglomerate diamonds to evaluate diamond resources with view of increase the resource value. ZCDC has expanded exploration work beyond Marange and Chimanimani to include Mwenezi, Chihota, Kezi and Binga. In its 5-year strategic plan, ZCDC aims to produce 10 million carats generating $1 billion foreign currency, contributing $250 million in taxes to government, employing 8,280 workers and paying $20 million to Marange-Zimunya Community Share Ownership Trust (CSOT).

Diamond mining activities

In 2016 and 2017, ZCDC annually produced 961,537 and 1,776,244 carats respectively. However, ZCDC aims to produce of 10 million carats annually by 2022. This year, ZCDC’s target is 3 million carats. Averagely, 10 to 15% of diamonds mined in Chiadzwa are gem quality stones.

The average diamond recovery is rate is 50 carats per 100 tonnes, translating to 0.5 carats per tonne. At one of its sites named RBZ due to its high yield, it is possible at times to recover 300 carats per 100 tonnes, about 3 carats per tonne.

The search is still on for the source of Marange alluvial diamonds in Marange which were a result of erosion by glaciers and rivers thousand years ago. Kimberlite pipes have not been discovered in Marange, but conglomerate diamond mining is quite promising.

All this is a stark warning, without discounting efforts to search for the missing $15 billion in Marange, Parliament and the public must not drop the ball on transparency and accountability issues concerning ongoing operations in Marange.

Getting funding for greenfield exploration. Kimberlite pipes have not been found in Marange. ZCDC is out in the country searching for the source of diamonds that we eroded and weathered by glaciers and rivers. Where these diamonds got eroded we still do not know. Exploration being done in Katete, Ngulue and Mwanezi. We aware that Venetia, one of the biggest diamond mines in SA, Venertia owned by DeBeers is operating 20 km of the border between South Africa and Zimbabwe,

Rough diamond sales: Cleaning, Sorting and valuation

To gain maximum value from diamonds mined in Marange, ZCDC ensures that there is adequate cleaning to remove the oxide skin coating, a process that pushes some diamonds into gems diamond bracket. Most probable, the accounts for one of the reason why diamond mining activities failed to deliver optimal economic, this does not discount the impact of criminal activities like deliberate undervaluation, under declaration and smuggling of gem quality diamonds, high valued stones.

In line with the Africa Mining Vision spirit, Botswana, a mature diamond producer and marketer is assisting Zimbabwe on diamond valuation. Realising that the price of rough diamonds was depressed in 2017, ZCDC took a strategic decision not to dispose its diamonds in that period.

This practice is similar to stock market trends, a shareholder gains when he or she disposes shares when share price is firming than at a time when share price is depressed.

So far, this year, 2 diamond auctions have been held in Harare fetching an average price of $80. Aside from disposing diamonds through auction, ZCDC is also considering the tendering system.

The tendering system can be effective if it is used to adjust rough diamond prices after valuation to prepare an effective auction system, in this case the minimum value sought would be established.

As per legal requirement, 10% of the diamond produced is sold locally to stimulate domestic cutting and polishing industry.

Illegal mining activities

Illegal mining activities are still a challenge because some community members were not relocated and still within diamond mining concessions. As a result, illegal diamond mining activities are a major challenge. To solve this challenge, ZCDC is planning to use drones to monitor illegal mining activities to give real time intelligence to security offers. The drones have night vision equipment. Roughly each drone costs $150,000. 3 competent pilots have been recruited to operate the drones.

ZCDC intends to acquire free hands equipment for diamond sorting. The current diamond sorting procedure is inefficient and creates opportunities for manipulation.

Contribution to Community Development

ZCDC’s employment policy gives preference to locals from Manicaland, hence locals constitute over 50% of ZCDC’s total employees. The entity allocates 10% of its profits to Marange Zimunya Community Share Ownership Trust. Several community development projects have been undertaken by the entity which include borehole installations, vocational training centre, Gandauta secondary school upgrade, free tillage, scholarship programs for students and gemmology centre in Mutare among others.

Environmental Rehabilitation and Mine Closure

Rehabilitation

Rehabilitation activities being undertaken by ZCDC: picture courtesy of Nyaradzo Mutonhori

Encouragingly, ZCDC has started to rehabilitate some area that were mined by previous diamond mining companies. So far, the company has rehabilitated close to 25 hectares. The company claims that is now fully compliant with the requirements of the Environment Management Act. Levels of water pollution, dust pollution and vibrations from blasting activities are being checked on quarterly basis together with the Environmental Management Agency.

Chinese presents at former Anjin diamond mining concession

The Chinese are on the ground at former Anjin’s diamond concession. A fresh fence has been erected around Anjin diamond concession and the air strip has been cleared. ZCDC appears to have no control of Anjin’s concessions. Could it be that the army who lead operation restore legacy are clearing the ground for Anjin’s come back given their 40% stake in the concerned entity. Anjin is one of the companies who are at the heart of squandering Marange diamond wealth. The Auditor General lamented that Anjin failed to produce its audited financial statements and the former Finance Minister, Tendai Biti singled out Anjin for not contributing taxes to government.

Way forward

The quest for better transparency and accountability gave birth to ZCDC. To achieve this, ZCDC must do more to break away from opaqueness associated with Marange diamonds. This entails among others publication of ZCDC’s annual reports on its website; public release of disaggregated data on rough diamonds produced, that is gem, semi-precious and industrial diamonds, disclosure of various taxes paid to various government institutions and disclosure of costs per CSR project.

ZCDC made interesting presentation concerning its contribution to the community development. There is need for Community Based Organisations to undertake social audits to verify if indeed 50% of ZCDC is from the local community. The social audit should also ascertain the value of corporate social investments undertaken by ZCDC to check value for money. Impacted mining communities should pressure ZCDC to transfer 10% of its shareholding to Marange Zimunya Community Share Ownership Trust as well as the disbursement of 10% profit to the community trust.

Since ZCDC alleges that alluvial diamond mining is no longer economically viable, there is need to demarcate areas where artisanal and small-scale miners can make use of diamond resources that are not ideal for large scale mining.

Government must make sure that companies like Anjin associated with squandering of Marange diamond wealth must not resurface to show commitment on fighting rampant corruption and illicit financial flows in the mining sector.

It is noteworthy that officials from Ministry of Mines were not present during the field visit unlike last year in January, the then permanent secretary of Mines, Professor Gudyanga showed signs of baby seating ZCDC during Parliament visit to Marange. Honourable Minister Chitando and his team must cushion ZCDC from political interference because diamonds are a tempting resource for greedy politicians.

Anjin Return? An Acid Test For The New Dispensation

In the rear-view mirror of Zimbabwe’s political and socio-economic narrative, Mugabe image looms large. But is the windshield clear enough for accelerated progress? One important clue which can help to unravel this puzzle relates to how the new government is managing the country’s mineral wealth- platinum, diamonds, lithium and gold among others.

Of all minerals, developments in the diamond sector warrants a close examination. This is hardly surprising though. Diamonds, because of their characteristics, items of high value which are easy to carry makes the stones attractive to criminals. Money laundering risk exposure in the trade of diamonds is well articulated by the 2013 Financial Action Task Force (FATF) report .

Early this year, the blog I wrote on mineral revenue transparency reforms: priorities for the new government made an interesting analogy centred on 2017 “Operation Restore Legacy” and 2008 “0peration Hakudzokwi” (no return to artisanal mining) in Marange. In both instances, the army moved in to restore order. In the end, the army gained significant stake in diamond mining and government. The army had a 40% stake in one of the biggest diamond mining companies operating in Marange, Anjin diamonds. The remaining stake was owned by Anhui Foreign Economic Construction (Group) Co Ltd (Afec) from China and 10% stake owned by Zimbabwe Mining Development Company (ZMDC).

Unarguably, the army’s involvement in Marange did not deliver any tangible development outcome, the $100 million defence college being the only exception. Likewise, the army gained key positions in the new government. Key office positions among other include the offices of the vice president, minister of agriculture and minister of foreign affairs and trade.

The history of Anjin’s diamond mining activities is quite murky. From the Auditor General’s 2011 report, it can be gleaned ZMDC was not committed to recover money from the proceeds of disposing 40% equity in Anjin to the army. In her 2016 report, the Auditor General failed to verify Anjin’s diamond earnings because the company could not avail its audited books. During the peak period diamond exports by value and volume, in 2012,  the former Minister of Finance, Tendai Biti singled out Anjin for not paying taxes. Zimbabwe exported 14,957,648.98 carats worthy $740,998,088.16 in 2012 according to Kimberly Process public statistics.  In July 2017, the Independent Newspaper reported that Chinese investors syphoned US$255 million from Anjin.

Arguing that the nation was not fairly benefiting from her rich Marange alluvial diamonds, easy pickings, not so difficult to mine, government decided to consolidate the diamond mines in 2015. A process made easy because of the expired mining rights for all the seven diamond mining companies that operated in Marange. Government then saw it fit not to renew the expired mining rights. All this was done under the former Minister of Mines, Chidhakwa.

Some argued that the move was to constrain the Lacoste faction that was deemed to be profiting from Marange diamonds through the army’s involvement. Lacoste was a ZANU PF faction allegedly led by Mnangagwa which was backed by the army and war veterans that was contesting with the G40 faction backed by the first lady, Grace Mugabe, to take over from Mugabe.

Chidhakwa, however, maintained that the main objective of forming ZCDC was to bring transparency and accountability in the management of Marange diamonds. That said, the objective was tainted by poor corporate governance as the Ministry of Mines through its former Permanent Secretary, Francis Gudyanga, baby seated state owned enterprise-ZCDC as the chairman of the ZCDC board.

On 20 April 2018, the Zimbabwe Environmental Law Association (ZELA) accompanied EU Ambassadors during their field visit to ZCDC diamond mining operations in Marange. One interesting observation was the fresh fence erected on Anjin diamond’s concession, air strip clearance and the presence of the Chinese on the ground.  A worrisome development. Is Anjin coming back?

A colleague and mentor Shamiso Mtisi remarked that the involvement of the army in business is not a challenge. In other countries, for instance the army is an active player in the economy. What matters is a strong dosage of transparency and accountability which is critical to deliver benefits to citizens and not to a few powerful individuals.

To win public trust and confidence, government must move with speed to align mining legislation with Section 315 (2) (c) of the Constitution to deliver transparency and accountability in the negotiation of mining contracts as well as performance monitoring of the mining contracts. In addition, government must urgently embrace the Extractive Industry Transparency Initiative (EITI) to enable the public to track various taxes paid to government institutions by mining companies. Transparency and accountability reforms in the mining sector are a key indicators to whether government is committed to curb corruption, to abide by the Constitution and to leverage the country’s abundant mineral wealth for socio-economic turnaround.

US$4.2 Billion Platinum Investment: Are Citizens Blind Folded to Unpack the Deal?

With world class platinum resources, second best only to South Africa, is Zimbabwe primed to achieve sustainable socio-economic development impact from exploitation of its mineral resources as pictured by the African Mining Vison (AMV). This blog argues that without transparency, it is difficult for public to hold government and corporates to account on negotiating fair mining deals that optimises mining benefits for citizens.

Last week, the state media hailed the ground breaking $4.2 billion investment deal in the platinum sector between government and Karo Resources from Cyprus. With gusto, the Minister of Mines Honourable Winston Chitando announced that Zimbabwe’s mining landscape will never be the same, if implemented fully, the project will directly employ 90,000 people- 15,000 and indirectly 75,000.

A massive investment considering that Zimplats, the country largest platinum mine employed a total of 5,941 people during its 2017 financial year, 3,063 on full time basis and the remainder 2,878 on contract basis. Karo Resources compounded the excitement by declaring that the project will grow Zimbabwe’s Gross Domestic Product (GDP) by 20%.

Rightly so, the Constitution through Section 315 (2) (c) provides for an Act of Parliament to enable “transparency, honesty, cost-effectiveness and competitiveness” during negotiation and performance monitoring of mining agreements. Unfortunately, the $4,2 billion deal came as a surprise to the public. The Minister of Mines promised that disclosure of some clauses of the agreements “……a number of which be made public over the next few weeks.”

Public disclosure of mining agreements is a critical enabler for fair mining deals that targets optimisation of mining benefits to citizens since the public has an opportunity to scrutinise the terms and conditions of the contract. As envisioned by the African Mining Vision (AMV) agreed to by African head of states in 2009, scrutinising fairness of mining agreements angles for optimal mining linkages in the following sectors; fiscal linkages; human resource development, upstream/ backward linkages; infrastructure linkages; downstream/ forward linkages and research and development linkages.

Pertaining to fiscal linkages, it is necessary to leverages on mineral resource exploitation to mobilise a fair share of tax revenue from mining activities, to fund programmes that enhance progressive realisation of Socio-Economic Rights (SERs) like health and education, enshrined in the Constitution. Because the US$4.2 billion agreement is not public, it is difficult to check whether Karo resources will pay a fair share of tax revenue from exploiting the country’s rich platinum deposits.

Ominously, government has not fared well in the past on mining fiscal linkages. A drawback is that the Mines and Minerals Act does not provide for competitive bidding on known lucrative mineral deposits as encouraged by the African Mining Vision. Competitive bidding creates opportunities huge signing on fees and better fiscal terms. As much as we celebrate the $4.2 billion platinum deal, it is sad to note that the economic value of platinum resources given to the investors is not known. Therefore, government must prioritise geological knowledge to ascertain the quantity and quality of mineral resources in order to negotiate better deals.

Another glaring example involves toxic tax incentives, for instance, platinum houses holding special mining lease agreements have been paying 2.5% mineral royalty fees against 10% prescribed by the Finance Act. It is noteworthy that the 2018 national budget statement provided for all platinum houses to pay 2.5% royalty rate, this has been affected through the Finance Act. Overall, the treasury through national budget statements (2010-2017), consistently lamented poor mining contribution to the fiscus.

Mining is associated with heavy infrastructure investments, water, power, transport and communication infrastructure. To maximises infrastructure linkages, other economic activities like agriculture, with no capacity to develop mega infrastructure, must have access to infrastructure developed by mining operations.

Although the disclosure was an outlier, encouraging to note, a 600-megawatt thermal power station will be built, 250 megawatts to service the mining, processing and refining. The access 350 will be released to the national grid to help to ease power shortages which augurs well for the development of other economic sectors. It is also vital to point that this will ease foreign currency shortages because Zimbabwe is relying on power imports from Mozambique and South Africa to plug power deficits.

Another critical area that could have been open for scrutiny if the $4.2 billion deal was public include the promotion of small to medium enterprises to supply goods and services required in the mining. Basically, the development of upstream or backward industries which is quite important to avoid an unhinged mining sector to the country’s economy. Procurement, notably constitute the largest share of revenue consumed in mining operations.

Commendably, it was disclosed that Karo Resources will process it platinum right up to the last final stage of recovering precious metals like platinum, palladium, rhodium and gold locally. Contract disclosure will then allow public performance monitoring on this deal to hold to account the investors and government.

Another issue that needs to be ventilated is beneficial ownership of Karo Resources and indigenous partners which will have 51% equity stake in this mining agreement. Beneficial ownership is important to curb corruption by unmasking the natural persons who are benefiting from this deal.

Lastly, conversation concerning sustainable development impact of mining would not be complete without discussing environmental rehabilitation and mine closure plans and costs. More importantly, Free Prior Informed Consent (FPIC) of communities to be affected by mining operations must not be overlooked.

Elections are drawing near, focus on electoral reforms seems to be the only game in town. The announcement of the 4.2 billion platinum deal and related deals in the lithium sector is a reminder that mineral resources governance reforms should not be dislodged on country development agenda. An Act of Parliament that enable public transparency in negotiation and performance monitoring must be urgently put in place as required by the Constitution, Section 315 (2) (c).

If government is serious about anchoring socio-economic development on mining, ascertaining the quality and quantities of our mineral resources is a must. This would enable competitive bidding necessary to optimise mining linkages across the whole value chain. Parliament and civil society must hold the Minister of Mines to account on his promise to disclose some clauses of the $4.2 billion mining agreement in the coming weeks.

SADC Regional Mining Vision Consultative Forum For Civil Society Organisations (CSOs)

PREAMBLE

As Southern Africa Development Community (SADC) gears to be the first regional bloc to craft its Regional Mining Vision (RMV) in order to explore opportunities for optimising sustainable development impact from exploitation of minerals, Civil Society Organisations (CSOs) from seven SADC countries met to give their input into the draft SADC RMV. Countries that were represented during the SADC RMV consultative forum for CSOs include Angola, Botswana, Lesotho, Mozambique, Swaziland, South-Africa Zambia and Zimbabwe. Organised by the Zimbabwe Environmental Law Association (ZELA), the meeting was held at Birchwood hotel in Johannesburg, South Africa on Wednesday, 21 March 2018. The objectives of the meeting were;

  • To raise awareness and understanding of the draft SADC RMV among CSOs to enable pointed contributions which add value to the development of the vision;
  • To discuss ways to cascade conversations around the draft SADC RMV to the citizens of each member state;
  • To share ideas on how to generate political will for and ways to hold government to account on realisation of SADC RMV aspirations.

The meeting was facilitated by Mtwalo Msoni from Publish What You Pay (PWYP) Zambia. Tafadzwa Kuvheya of PWYP South Africa gave the welcome remarks in which she highlighted that high inequality in South Africa makes a compelling case for crafting a SADC RMV that optimises community share of benefits from mining. Dr Oliver Maponga with United Nations Economic Commission for Africa (UNECA) shared the draft SADC RMV which is shaped by the tenets of the African Mining Vision and accordingly is aimed at optimising the sustainable developmental impact of mineral resources extraction across the region whilst being cognisant of the differing maturity of the minerals sector[1] in the Regional Member Countries (RMCs).

In its vision, “the SADC region strives to attain a transparent, equitable and optimal exploitation of regional mineral resources to underpin broad-based sustainable regional growth, socio-economic development and inter-generational equity, through the realisation of all of the mineral linkages, in line with the SADC Regional Development Agenda and other continental and international aspirations”

CSOs CONTRIBUTIONS TO IMPROVE THE DRAFT SADC RMV

Following the review of the SADC RMV, the CSOs present in the seven countries agreed the following to be incorporated into the report ;

  1. On the Glossary of the SADC RMV.
  • A glossary to define key terms used in SADC RMV be included in the framework; for instance, define parameters of “transparency” and “local community”.
  1. On the Tenets as presented in the RMV.
  • There was need to add an addition tenet on “community participation and share ownership” in mining and related business.
  1. On the aspirations of the RMW on Mineral Governance.
  • It was submitted that although the regional mineral revenue transparency framework is desirable, the brand SADC Extractive Industry Transparency Initiative (SEITI) may not be palatable to countries like South Africa and Zimbabwe who prefer home grown initiatives rather than western driven frameworks. As such, the key underlying framework to promote good governance and transparency in the mining sector should be operationalization of the African Minerals Governance Framework (AMGF).
  1. On the RMVs aspirations on Mineral Fiscal Linkages
  • There was need to include domestic investments(investments from within the region) in the RMVs proposed initiative to “develop of a regional agreement to manage foreign direct investment into the region from tax havens and/or secrecy domains and encourage foreign investment from similar tax and transparency jurisdictions”
  1. On the RMVs aspirations on Mineral Forward Linkages for key mineral feedstock
  • There was need for the RMVs to ensure that “Mineral knowledge linkages” are reflective of how SADC intends to deal with policy tension linked with renewable energy and fossil energy.
  1. On the RMVs aspirations on the Mineral Knowledge Linkages
  • There was need for the RMV to include an aspiration on the protection of national heritage into its proposed aspiration on the “harmonization of all mining legislations to include license obligations for corporate local-regional spending on research, development and innovation and on skills development”
  1. On the RMVs aspirations on the Artisanal and small-scale mining sector
  • The vision should inspire regional linkages in ASM sector on issues like innovation, research and development, backward and forward linkages since the sector has unique attributes compared to large scale mining. Focus on ASM linkages is quite critical considering that community participation or participation of indigenous knowledge is very important.
  • Differentiation of artisanal mining and small-scale mining is needed
  • Special permit for artisanal mining which is locally accessible and affordable
  • Demarcated zones for artisanal mining which are well prospected to ensure profitable mining
  • Special inheritance laws for women and the girl child in the ASM sector
  • Fair and equitable access to mining claims, finance and other opportunities for women along the ASM sector value chain.
  1. On the RMVs aspirations on Environment and Social Impacts on Mining

CSOs noted with concern that the draft SADC RMV neither included a specific aspiration on Environment management nor provided sufficient content on environmental management in detail. As such the following were suggested to be included as aspirations of the SADC RMV on environmental management;

  • Harmonization of environmental requirements to avoid race to the bottom. (permitting requirements, independent EIA consultants- with community input)
  • Following harmonization; consider a SADC framework on environmental protection for member countries so as to ensure compliance through interventions of countries with have passive environment protection implementation. SADC should consider having a comprehensive Unit for this
  • Ensure the establishment of Environmental Closure/Rehabilitation Funds in all countries in the region.
  • Consider adding specific aspirations on mitigating the environmental impacts of integrated regional mineral beneficiation
  • Consider regulations on quarantine of use of specific chemicals across the countries
  1. On Communities

CSOs noted that the RMV did not include specific aspirations on communities, as such, it was proposed that aspirations of mining on communities include;

  • A Definition for the parameters of a “mining community” in the SADC region
  • Aspirations on the direct benefits of “mining communities” from the linkages as proposed in the RMV
  • Aspirations on adherence to Free Prior Informed Consent principles
  • Aspirations to ensure adequate participation of women in planning and community ownership processes
  • Aspirations on communities granting a social licence to operate Social licence to operate
  • Develop compensation benchmarks for displaced communities (pollution etc)
  1. On Gender

CSO that the SADC RMV needed to include specific aspirations on gender, as such it was proposed that the RMV include;

  • Aspirations on equal employment opportunities obligations to admit at least a number of women in the training schools.
  • Adequate participation of women in planning and community ownership processes(FPIC)
  • References to the to SADC protocol on Gender and the Sustainable Development Goals on Gender (SDG 6)
  1. On CSR/CSI Codes and Protocols
  • Aspirations to prioritize the supply of services and goods to local community owned business
  • The Development a SADC protocol on CSR and FPIC (include a tribunal where local communities are consulted first)
  • Ensure a legal social and labour plan (SA law can be used as a reference point)
  • Develop a SADC community development agreement plan for all companies to input on.

ACTION PLAN

Anne Mayher with IANRA facilitated the action plan.

A. Actions between 21 March and 31 May 2018. Some of the following activities are to be done before 31 May, while some of them will also continue to be carried out on an ongoing basis, even after the 31st of May.

  1. Timeline – Aim is for the RMV to be tabled with SADC in about 6 months with much back and forth in between in finalising it. AMDC will take our submissions and see how to include them in the RMV and send us back a revised document for our further comments, and then they will finalise the document.
  2. 1st action after the meeting – compile our own input – at this meeting this is what came out. Report will be shared by Mukasiri Thursday the 22nd of March – with this group. We can then give input. Give us 3 days to finalise the report.
  3. 2nd action – Each country present should facilitate the sharing of the AMV and this group’s recommendations to ask for additional input. Comments should be submitted by 30th of April for consolidation by a sub-committee including Mphila, Mukasiri and Tafadzwa. They will compile the report of all the submissions, identifying common threads/issues and major points of difference – this compilation will start by the 20th of April. This document will then be shared with the group, and then it will be shared with SADC via IANRA. Group will make every effort to submit input by 30th of April. If group members need more time, then final deadline will be 31st of May. Everyone should take their own initiative and maximise events and activities to get input on the RMV. Regarding Consultations:
  • IANRA – Teleconference with IANRA members by 4 April to get their input on this plan, develop a strategy/activities/plans. Write an email which shares the draft, action plan, share docs – to give inputs. Make sure members are well aware of developments that are taking place… generate report.
  • Alternative Mining Indaba (AMI) – Share documents on AMI email lists.
  • SADC Coalition of NGO’s – Look at SADC 1 campaign, share documents with its database.. Semere. Also consult with NANGO’s.
  • Documentation of consultation process is needed. It should be captured in the report.
  • Need to ensure inclusivity in consultations with CSO’s.
  • Training/consultation meeting with IANRA, and other CSO’s?
  • A popular version of the draft SADC RMV must be produced and translated to local languages to bring on board community voices
  1. Form an email list for this group – Mukasiri
  2. IANRA could champion the RMV along with attendees at the meeting through a specific country such as Zambia, Lesotho or Swaziland.
  3. Write to AMDC for technical support
  4. In Zimbabwe – parliament is also easily excitable – could work with them to influence RMV processes.

B. Consultation with CSO’s and communities (ongoing even after 31 May 2018)

  • CSOs to hold multi-stakeholder dialogue meeting on regional mineral value chains to hold to account government on implementation of the SADC RMV.
  • Work with Alternative Mining Indaba (AMV on agenda for last 3 yrs) to talk about RMV next year.
  • Use National AMI processes, such as the NAMI coming up. Share dates for national AMI’s.
  • SADC People’s Summit – in August. Tafadzwa will ask EJN re including consultation on RMV there. Also see if Sheilan at AMI could do some coordination of getting input from AMI attendees.
  • Mid-August Forum. Find space there for consultation.
  • Southern African Council of Churches FOCCISA could also be considered for consultation
  • AMDC website – SADC could develop some of the tools that have done by AMDC.

C. Fundraising:

  • ECA funded this process. How do we target those that are funding these development processes – to work with CSO’s.
  • Look at possible donors for additional consultations – NCA? Oxfam Southern Africa?
  • CSOs to popularise the draft SADC RMV in each member state, stimulate discussion and compile country input for the draft SADC RMV before the end of April.
  • International Alliance for Natural Resources in Africa (IANRA) and SADC association on non-governmental organisation to circulate the draft SADC RMV and work-plan to their members and encourage them to popularise the vision.
  • Initiative for Natural Resources in Africa (IANRA) to consolidate comments from each member state for submission to SADC secretariat.
  • A popular version of the draft SADC RMV must be produced and translated to local languages to bring on board community voices
  • CSOs to hold multi-stakeholder dialogue meeting on regional mineral value chains to hold to account government on implementation of the SADC RMV.

[1] “mineral” sector includes all activities related to exploration, construction, mining, mineral processing, smelting, refining, up to the production of mineral-based intermediates ready for consumption in the local/regional manufacturing, infrastructure, agriculture and other downstream sectors.

Is RBZ’s Gold Mobilisation Fund a Jack Pot for Artisanal and Small-Scale Miners?

Gold from Mberengwa

“Most beneficiaries are not aware that $74 million was disbursed in 2017 and that the funding has been doubled to $150 million in 2018. Furthermore, there is need for awareness raising on issue of collateral, especially acceptance of cattle as collateral security” Themba Sibanda, Zimbabwe Miners Federation organising secretary
Faced with severe foreign currency shortages, the Reserve Bank of Zimbabwe (RBZ) is banking on the propulsive role gold to drive export earnings. In its 5-year plan, RBZ has a target to produce 30 tonnes of gold annually by 2020 (2015 Monetary Policy Statement). Previous peak gold production was 27 tonnes, produced in 1999, at a time when contribution from Artisanal and Small-Scale Mining (ASM) was meagre, around 5%. As part of the measures to boost gold production, RBZ identified the need to harness the potential of ASM by funding mechanisation of small scale mining. Through the 2018 Monetary Policy Statement (MPs), RBZ announced that ASM gold sector funding has been doubled to $150 million. The same MPS revealed that in 2017, $74 million was disbursed to 255 small scale miners. Remarkably, last year (2017), ASM gold production surpassed that of large scale producers, accounting for 53% of the total gold production: 24,843.87kgs. Along with the “no questions asked policy” on gold deliveries to Fidelity Printers and Refineries (FPR), gold mobilisation fund is credited for boosting gold production in the ASM sector.
Find below some basic facts in numbers that can help to answer whether increased funding by RBZ to the ASM gold sector is a jack pot for miners: an analysis of the 2018 Monetary Policy Statement;

  • 1 symbolises that RBZ through FPR is the sole gold buyer and exporter in Zimbabwe
  • $74 million was disbursed to small scale miners in 2017 255 small scale miners benefited from $74 million disbursed in 2017
  • The number of women who benefited from the RBZ’s loan facilities is not known as the number of beneficiaries is not disaggregated to show how many women and men benefited from the facility
  • There are about 10,000 registered small-scale miners in the country according to Zimbabwe Miners Federation (ZMF). Percentage wise, RBZ fund was accessed by 2.5% of the registered small-scale miners.
  • Averagely each miner got around $290,000 from the $74 million disbursed by RBZ to 255 small scale miners.
  • 2,960 is the number of small scale miners that would have received support from the RBZ since most small-scale miners need around $25,000 to mechanise their operations. Basic equipment includes a compressor, jack hammer, generator, small hammer mill and a water pump.
  • $75 million is supposed to be received by women in ASM gold sector If RBZ comply with constitutional requirement, Section 13 (3) to afford women equal development opportunities, because $150 million funding is earmarked for 2018.
  • The number of opportunistic investors who shifted into gold mining to take advantage of the loan facility is not known as beneficial ownership of the loans was not disclosed. The risk being that some businesses which benefited from the loan could be driving illicit financial flows by illegal using gold as a currency to finance their imports due to foreign currency shortages.
  • No amount has been set side to encourage rehabilitation and closure of gold mines. Much as the nation experts to benefit from increased gold production by earning much needed foreign currency, generation of jobs and incomes, environmental challenges should not be a blind spot. Innovation is needed, for instance, the conversion of 10% export incentive scheme to a fund that can be used to incentivise mine rehabilitation.
  • $150,000 is the value of equipment support given to Zvishavane-Mbrengwa small scale miners association in 2015 by Mimosa Mines’ corporate social investments. Can RBZ take a leaf from this and help to strengthen small scale miners’ associations who are critical players to formalisation of the ASM sector through self-regulation.

Analysis of the 2018 monetary policy statement: a focus on mineral export incentives

  • RBZ’s export incentives from 05 May 2016 to 31 December 2017 sterilised mineral royalty revenue by a discounting factor of nearly 86%. This obviously hurts the government’s desire to create fiscal space, when revenue generation is constricted my toxic incentives

Themed “Enhancing financial stabilisation to promote business confidence” is the 2018 monetary policy statement tooled to support mining sector led contribution to socio-economic development? This monetary policy was crafted in the context of cash shortages that chocking the ASGM formal trade; RBZ gold support fund, although a welcome development, it is only benefiting a few and there is no clarity on how men and women are benefiting from the fund; moratorium to facilitate recoupment of externalised money and assets; ballooning government debt crowding private sector access to capital; and complaints by Civil Society Organisations (CSOs) that export incentives have sterilised mining royalties. This articles specifically focuses on rationality of the export incentive scheme concerning mining. It builds on two prior articles- How Helpful or Harmful is RBZ’s MINING Export Incentive Scheme and Does RBZ’s Export Incentive for Mining Need a Re-think .

To stimulate export earnings, RBZ introduced a 5% export incentive scheme in May 2016. Mining as the largest exporter automatically became the largest beneficiary of export incentives. During public pre-budget consultations, CSOs like ZELA raised concern that export incentive in the mining sector have sterilised mineral royalties. Furthermore, export incentives are an unnecessary sweetheart deal to a sector that largely exports raw minerals. A sector whose resource base is finite which treasury and civil society accuse of not fairly contributing to development finance, illicit financial flows are a major concern.

Cumulative export receipts and incentives amounts (05 May 2016- 31 December 2017)

Sector Export Receipts (USD) Incentive Amounts (USD) Bond Notes Issued to Banks (USD)
Mining excluding gold $2,645,809,356 $58,268,089 $56,000,000
Gold producers $1,282,023,093 $59,313,208 $59,200,000
Totals $3,927,832,449 $117,581,297 $115,200,000

Extracted from the 2018 Monetary Policy Statement page 8

From the above table, the mining sector received export incentives amounting to $117,581,297 from 05 May 2016 to 31 December 2017. Looking at annual revenue performance reports produced by Zimbabwe Revenue Authority (ZIMRA), the only distinct mineral revenue stream is royalty income. In 2016 and 2017, mineral royalties’ contribution was $62,901,509.54 and $136,013,3018.23 respectively, amounting to $136,013,3018.

Considering that mining sector received $117,581,297 as export incentives from 05 May 2016 to 31 December 2017 and paid $136,013,308.23 mineral royalties almost in the same period, January 2016 to 31 December 2017, in real terms, mining paid mining royalties amounting to $18,432,011.23 as royalties. Effectively, mineral royalties were discounted by nearly 86% if we factor in export incentives. Royalties are a reliable and predictable income stream which is less sustainable to tax evasion and tax avoidance unlike profit based taxes. RBZ’s move to sterilise mining royalties hurts government’s fiscal abilities to finance service delivery from the country’s huge mineral wealth endowment.

According to RBZ, the rationale for export incentives is to drive export earnings. In the mining sector, export earnings can be boosted by several factors which include either price or production increments or a combination of the two. Also export earnings can be boosted by mineral value addition and beneficiation and access to capital among others. The monetary policy contends that world commodity prices for base metals and precious metals are firming, platinum being an exception. A positive development on export earnings which is not related to export incentives.

Ferrochrome production has spiked mineral export earnings, the lifting of the ban on raw ferrochrome exports is the main driver increased production in addition to favourable market prices. Gold, the lead export earner in the mining sector is anchored by Artisanal and Small-Scale Gold Mining (ASGM) whose production has eclipsed large scale miners in 2017. ASGM accounted for 53% of the country’s total gold production, 24,843.87 kgs. A combination of factors can be credited for this success story. The “no questions asked policy on gold deliveries” and RBZ’s gold production support fund are some of the prominent factors. $74 million was disbursed to 255 small scale gold miners in 2017 and RBZ has doubled the fund in 2018 at $150 million.

If the above factors are to be considered, RBZ must surely come up with a sensible justification on how the incentives scheme in the mining sector has boosted mineral production. Failure to access cash at the bank is rapturing trust between ASGM and government, a condition that festers illegal trade of gold. RBZ pays 70% cash in form of US dollars and 30% through a bank transfer or bond notes, the latter getting a 5% premium. The export incentive regimen will continue according to RBZ. Gold export incentives have been increased to 10%, but without addressing persisting cash shortages, more gold in the ASGM will find its way to the black market which is prepared to pay 100% cash in foreign currency.

The drive to boost exports through incentives can better be addressed by a progressive export incentive regime. Exports of raw minerals should not be rewarded, but with increased mineral value addition, the export incentives accruable to the mining sector should also increase. As it stands, there seems to be policy discord, on one hand government is incentivising miners for exporting raw minerals. And on the other, government has export taxes to discourage the beneficiation of raw minerals. Minerals are a finite resource.

The opportunity to garner taxes to fund social service delivery will not last forever. It disheartening to note that RBZ has discounted mineral royalty revenue by 86% for the past 2 years. To finance the Sovereign Wealth Fund (SWF), 25% of mineral royalty revenue was ear marked for this exercise. RBZ’s puts into jeopardy intra and intergenerational of mineral wealth, a violation of constitutional principle on public financial management.

An ear to the ground: artisanal and small-scale gold mining in the new dispensation

Chigayo gold.jpg

Mining has played an economic shock absorber role, never mind the squandering of Marange alluvial diamond wealth. The Artisanal and Small-Scale Gold (ASGM) sector which has recently eclipsed production of large scale miners has been instrumental, not only in earning the country much needed foreign currency, but creating employment and income generating opportunities for over half a million people directly.

A compelling case is made for ASGM as a front door way of empowering poor but resource rich communities. Certainly, ASGM has its ugly side. Negative externalities like damage to the environment, disrespect for property rights, violence, alcoholism, spread of diseases, injuries and deaths, all deserves to be mitigated to better account for ASGM benefits.

Repeated calls have been made by the new government that Zimbabwe is now open for business, what opportunities and challenges does this policy direction mean to ASGM sector? A new Minister of Mines with strong mining industry background is now in charge, will he be pro large-scale mining or be considerate to ASGM? from the architects of command agriculture, is command mining on the cards? How government is fairing on curbing illicit financial flows with ASGM production eclipsing large scale miners? And given the unsustainable nature of ASGM, is diversification of rural economies a priority? The following ten points helps us to have a pulse feel of ASGM in the new dispensation.

Foreign direct investment and ASGM

Government has made attraction of Foreign Direct Investment (FDI) in the mining sector a priority in its quest to enhance economic revival. Attraction of FDI in the mining sector is closely linked with large scale investors who may view growth of ASGM as a threat. An expression of interest has been published by Ministry of Mines which include investments into the Zimbabwe Mining Development Corporation CZMDC)’s gold assets, Jena Gold Mine in Kwekwe and Evington in Chegutu. Taking advantage of ZMDC’s moribund operations and vast idle claims, ASGM is thriving in these areas. Artisanal miners have pinned hope on government to reallocate some of the unutilised gold claims owned by ZMDC, including other large-scale miners.

There is an inherent risk that government’s inclination to attract FDI may lead to the displacement of ASGM. If not handled well this can cause conflict and threaten a way of livelihood for many people residing in rural areas. With the impeding drought this year, predictably, ASGM will attract more players in rural areas.

New Minister of Mines with Large Scale Mining DNA

To make an impression on investors, a new Minister of Mines with a solid mining industry background was appointed. Honourable Minister Winston Chitando is a former executive chairman of Mimosa platinum mine, equally owned by Implats and Sibanye, both listed at the Johannesburg stock exchange. So, the Minister may have a soft spot for large scale mining operations but he must avoid playing “step mother” to the ASGM sector. Without a doubt, large scale miners offer less administrative burden when compared to ASGM.

That said, ASGM is not a matter of impressive macro-economic indicators disconnected from livelihood of many people residing in resource rich areas. When large scale miners exxperience windfall revenues, evidence of increased community purchasing power is barely notoceable. Along with agriculture, ASGM is the nerve center for rural economies who are susceptible to climate change risks, droughts and floods.

It is noteworthy to say the Mimosa platinum mine has been exemplary though their Corporate Social Investments (CSIs) by providing equipment support to ASGM in Zvishavane and Mberengwa. In 2015, Mimosa donated compressors, jack hammers and a vehicle to Zvishavane- Mberengwa small scale miners’ association to the tune of $150,000. Hopefully, Chitando who was at the helm of Mimosa during that time can use his newly acquired influence to spur greater cooperation between large scale miners and ASGM.

Softening of indigenous laws in the mining sector

The indigenisation requirement for ceding at 51% equity to indigenous partners is set to apply only to platinum and diamond sectors. Without considering its effectiveness on the ground, ideally, indigenisation seemed to have a better package for empowering resource rich communities through Community Share Ownership Trusts (CSOTs). Mining companies were required to cede 10% equity to communities around mining areas. However, only two out of sixty-one established CSOTs were given share certificates – Gwanda and Umguza rural districts. According to the National Indigenisation and Economic Empowerment Board (NIEEB), $39 million has been paid to CSOTs as seed capital. 3 platinum mines anchor contributions with a combined total contribution close to $30 million,

Restricting indigenisation to platinum and diamond sectors leaves government with pressure to come up with empowerment strategies for resource rich communities. There is no need to reinvent the wheel. Formalising ASGM is a front door way to empower directly over half a million people who are engaged in the sector. It would be highly regrettable for government, after scrapping softening of indigenous laws, to side step ASGM in its policy interventions in the mining sector. Already small-scale miners in gold and chrome sectors are being squeezed out mainly by Chinese nationals. In Bubi, the Chinese owned custom milling services have taken business away from indigenous millers. Government must deliberate consider limiting foreign participation in the ASGM sector and help the players to acquire appropriate technologies.

African Mining Vision and ASGM

Government has shown willingness to reform. Although it has its own faulty lines, the African Mining Vision (AMV) agreed to by the African head of states in 2009 offers a framework that countries can customise. AMV recognise ASGM as an indispensable sector, which must co-exist with large scale miners because some deposits are not economically viable for large scale mining. Furthermore, ASGM can be an integral part of rural economies as it can potentially stimulate growth of within and beyond ASGM supply chain opportunities.

As government moves to reform the archaic and colonial Mines and Minerals Act, it is important recognise artisanal mining through a special permit which enables easy of doing business for poor communities whose livelihoods have been criminalised. The Ministry must leverage of the work done by the mining Technical Working Group (TWG) on ease of doing business which came up with proposed terms and conditions for a special mining permit for artisanal mining.

Curbing Illicit Financial Flows Linked with ASGM

Informality and economic lucrativeness have conspired to make ASGM susceptible to illicit financial flows (IFFs). To stifle side marketing of gold, government must address cash shortages which make it difficult for artisanal miners to access the 30% payment through bank transfer or bond notes. The other 70% payment is made in cash – US dollars. Broadly, foreign currency shortage has elevated the significance of gold as a substitute currency to US dollars.

Businesses resort to buying gold which is highly liquid in countries like South Africa to finance importation of goods and services when they fail to access foreign currency. Although production of ASGM has outstripped large scale producers, government must not be blind folded by this success, a lot more must be done to curb syphoning of gold from the official market

Claim Ownership Disputes and Mining cadastre

High levels of corruption and outdated mining title management system have triggered numerous claim ownership disputes. This is affecting ASGM production. Prominent women miners in Matebeleland South have stopped mining for 2-3 years because of claim ownership disputes. Normally, ownership disputes are tied to rewarding mines. Government must urgently prioritise resources for a computerised and open title management system to enable transparency and accountability.

From the architects of command agriculture, is command mining on its way

For a long time, players in ASGM have been envious of government’s mechanisation and input support to agriculture. Now that Mnangagwa is the President, the champion of command agriculture, a man deemed to have a soft spot for ASGM, expectations have ballooned for a command mining scheme. President Mnangagwa has strong roots in Kwekwe, a town whose economy is pivoted on ASGM.

Interestingly, Zimbabwe Artisanal and Small Scale for Sustainable Mining (ZASMC) president, Engineer Murove, has compiled a blue print on command mining. Expectations are that government will roll out mechanisation and input support to the ASGM sector like command agriculture to boost gold production, ease the foreign currency shortages, create employment and stimulate community enterprise development.

Environment management

Widely known for its poor environmental management practice, the regulators have not been helping matters either through imposing burdensome Environment Impact Assessments (EIAs) to ASGM. It is heartening to note that the Environment Management Agency (EMA) is moving in the positive direction to enhance formalisation of ASGM through tailor made environmental regulations. Lessons can be learnt from Tanzania, a country with simplified environmental regulations for ASGM.

Technical capacity building for ASGM

Learning institutions like School of Mines, University of Zimbabwe and Midlands State University have commendable programmes for equipping players in the ASGM sector with skills to improve mining and mineral processing methods. Because of the huge demand, the is need for civil society players to innovate in order to address the yawning skills gap particularly for women miners. For example,the Zimbabwe Environmental Law Association (ZELA) is in the process of setting up a professional club for women in mining which will be carrying outreach visits to women miners from time to time.

ASGM is not a sustainable economic activity

By nature, minerals are finite resources. Hence economic gains from mining, ASGM included are not sustainable unless revenue generated from mining is reinvested into productive sectors of the economy like agriculture and manufacturing. It becomes fundamental to come to encourage innovative savings schemes and community enterprise development exploiting both ASGM supply chain opportunities and diversification of rural economic activities.

Some positives can be seen already. In Shurugwi, a small-scale miner has diversified into hotel and catering services. It is common for players in the ASGM invest in cattle and farming activities. Largely, gold producing areas are famed for consumptive expenditure, luxury cars and alcohol. Wealth is often squandered. Stakeholders, government, civil society and business must join hands with players in the ASGM sector to promote a sector which is an integral part of rural economies as envisages by the AMV.

Conclusion

Formalising ASGM presents great opportunities for government to comply with the constitutional requirement that mechanisms must be put in place to ensure communities benefit from resources in their areas. This becomes more pressing considering that government has moved to soften indigenisation framework for all minerals, except for platinum and diamond.

Government must break away from urgently from colonial Mines and Minerals Act and recognise artisanal mining through a special permit as recommended by the Mining TWG on ease of doing business reforms. Since some mineral deposits are not viable for large scale mining, there is room for having ASGM as an integral part of the mining sector as encouraged by AMV.

Of course, formalising ASGM goes beyond legalistic measures, that is why government must be at the fore front of promoting mechanisation of the ASGM sector and provision of scarce finance. We must not lose sight though that ASGM is not sustainable, so initiatives to enable diversification of rural economies must be prioritised soon rather than later.

Report on Mines and Minerals Bill held on the 19th and 20th January 2018 at Leopard Rock Hotel, Vumba

By Malvern Mudiwa, Marange Development Trust (MDT) Chairman

The workshop was hosted by the Chamber of Mines. Several stakeholders participated at the workshop and these included the Ministry of Mines led by the Minister Hon. Winston Chitando , Chamber of Mines, Fidelity Printers, Zimbabwe Mining Federation, Speaker of Parliament, Honorable Advocate Jacob Mudenda, Parliamentary Portfolio Committee on Mines , ZCDC Board and staff led by the Chief Executive Officer, Dr. Moris  Mpofu , Rio Zim, EMA, Small-scale miners, the Manicaland Provincial Minister,  Hon. Monica Mutsvangwa, and Marange Development Trust, represented by its Board Chairman, Malvern Mudiwa

In his keynote address, the Speaker of Parliament, Advocate Jacob Mudenda, emphasized that the Bill must sail through no later than 31 March 2018 and he expressed his commitment to see it through. He pointed out that Parliament must facilitate community involvement. He also queried why certain stakeholders were not involved in such an important occasion such as Civil Society Organisations, experts from the University of Zimbabwe’s Department of Geological Survey, and the Attorney General’s Office who gives guidance to Government on technical issues. He also talked about the absence of exploration data which ascertain the quantity of mineral resources 37 years after Independence; hence the need to invite researchers from the University of Zimbabwe.

 Another issue of great concern which Adv. Mudenda talked about was that of the President who is globetrotting without looking at the importance of including Parliamentary Portfolio Committees.  Illicit financial flows were another issue that needed urgent attention. The Speaker emphasized on mining houses to seriously look into ploughing back into the communities. He talked about the need to scrutinize mining policies.  In his own words, the Speaker submitted that “there was no robust mining policy”, citing the example of Mutoko where the Black Granite is mined, but where there is a trail of destruction and land degradation. He quoted section 13 of the Zimbabwe’s Constitution which outlined goals of national development.

Concerning the issue of Community Share Ownership Schemes (CSOTS), his observation was that it was marred by corruption. Certain people took advantage of loopholes since there was no law which compels mining houses to contribute towards CSOTS. These corrupt people went to the extent of fooling even the highest appeal of the land, the President, to display a dummy cheque of US$1,5 million and still getting away with it.

The next presenter was the Minister of Mines and Mining Development, Hon. Chitando. He talked about challenges that are being faced by many mining companies in the country. Among them is Hwange Colliery which he says is operating below capacity. However, he said there are noticeable positive changes given the production statistics. Among other factors, he cited overheads as the biggest challenge the company is facing. Hwange Colliery draws water from the Zambezi River. Such things as the maintenance of road infrastructure in Hwange, the refurbishment of the hospital and staff houses as well as the mortuary should be addressed. Its workforce stands at 2000 workers. Nickel prices were said to be firm while diamond production levels were equally encouraging. Since the taking over of mining operations by Government to form ZCDC there are signs of progress according to the Mines Minister  ZCDC produced 3 million carats in 2017 with an anticipated production of 4 million carats at the completion of the conglomerate plant that is under construction. He talked about the need for value addition on diamonds, and the need to put up a cutting and polishing plant.

JENA MINE- The Minister said it is in a sorry state regardless of being funded, it never improved. He suggested that maybe it was underfunded, He proposed 20 million bail out. The mine is currently producing 10 kg per month compared to 40 kgs during its peak production period

GOLDEN COPY MINE- Highly prospective no much information.

KAMATIVI-  Contains 1,4 billion of Lithium, progress underway to resuscitate the Mine.

SHABANI –  Mashava Mine test works on the Dumps in progress reprocess of the dumps which can reinvent ZMDC.  

Special Grants Applications

The Minister expressed commitment to ensure that all applications are responded to within a reasonable time frame. He wants to move away from a tradition of sitting on or ignoring applications

Environmental Rights        

The Minister said he was worried by the level of environmental degradation in mining areas. He also noted that there was a total disregard of environmental issues perhaps because ‘we allowed it to happen’.


   Easy of doing Business     

There is no conflict of interest.  The Ministry subscribes to it though they have their own way of doing business.

 The Permanent Secretary in the Ministry of Mines, Mr Munesuishe Munodawafa, presented the objectives of the meeting.

The Chairperson of the Portfolio Committee on Mines and Mining Development, Hon. Temba Mliswa, acknowledged the effort that was put by the former Chairperson on the Mines Committee, Daniel Shumba, who was unfortunate to see the fruits of his efforts. He told the delegates that he met with the President who wants to see the Bill issue done without fail. He also shared the same sentiments with the Speaker of the House of Assembly on the absence of the Attorney General and Civil Society Organisations at this important workshop. The Chairperson gave showers of praises to the new Minister of Mines for recognizing the role of Parliament as compared to his predecessor. He also shared the importance of exploration and time-frames which he said was very critical.  As a nation, we should know at least what we are sitting on, and this called for sound Indigenization laws.

                                   Roles of Permanent Secretaries

There were many contentious issues that were raised during the public consultations. Some of them were the composition of the Mines Affairs Board, particularly on the role of the Secretary of Mines. Parliament is currently considering a new Bill known as the Public Entity and Corporate Governance Bill. This proposed law seeks to address the role of Permanent Secretaries in relation to Boards and Parastatals under their ministries. The Bill further seeks to address issues of good corporate governance, accountability and transparency, among other key result areas. The Mines Committee and Energy will have under consideration some of the provisions in that Bill, in order to improve on the Mines and Minerals Amendment Bill.

Impacts Associated with the Introduction of the Cadastre System

·       The target areas included artisanal small-scale mining;

·       Whether the Bill will be able to address the farmer-miner relations;

·       The impacts of ‘use it or lose it policy’, particularly on large-scale producers who own numerous claims. There was extensive debate on this subject;

·        The restrictions placed on riverbed mining and the impact they have on artisanal and small-scale mining. The argument was that the Government banned riverbed mining by artisanal miners at the same time offering the same to the Chinese companies.  This was taken note of for consideration by the Ministry;

·        The Bill does not fully recognize artisanal and small-scale miners, yet they play a significant role, particularly in the gold sector. For instance, in 2016 alone, they contributed almost 40% of total gold deliveries to Fidelity Printers and Refineries. All parties were in agreement in this section;

·       Conflicting laws, particularly the one on the Safety, Health and Rehabilitation Fund being proposed in the Bill and the Environmental Fund, administered by the Ministry of Environment, How will such provisions be reconciled? The ministry took note of it and is subject for consultations and advice since the Minister concurred;

·         On mining disputes, the Bill is silent on timeframes for resolving these, yet the industry has many outstanding disputes;

·       Some of the penalties proposed in the Bill are too harsh and outrageous. For example, a breach on riverbed mining can lead to imprisonment for a period of not less than 10 years, yet poor and ordinary people in rural areas depend on riverbed mining for their livelihood. On this one, again, the ministry was in agreement, subject to further consultation.

·       The unclear reasons behind the classification of the strategic minerals were discussed. There was a debate on which minerals must be strategic minerals. They all agreed that it must be referred to the AG’s office for the definition first.

In summary, most issues raised by the Parliamentary Committee were agreed upon. It was hoped that by end of February 2018, the Bill will sail through.

                                                      Sidelines Meetings

I had the opportunity to have some discussions on the sidelines with the ZCDC Chief Executive Officer, Dr. Moris B. Mpofu in which we exchanged notes on various issues among them, security in and around the diamond mining areas, where communities are subjected to all sorts of abuse from dog bites, physical beatings, and shooting of harmless people, to mention just but a few. We proposed to have community involvement on trying to find a lasting solution to this problem. Also on discussion was the issue of community income-generating projects. Small-scale irrigation schemes were suggested and efforts to implement the proposal were already at an advanced stage.

I had the opportunity to raise the issue of Tinoengana village on the subject of water and cattle dip tank which was vandalized by mining activities. It needs urgent attention which he took note of and promised to attend to it.

I was fortunate to have some discussions with the Minister of State for Manicaland Provincial Affairs, Hon. Monica Mutsvangwa, and we shared some notes. This brings me to the end of this report.

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