26 July 2011

Zimbabwe: Chrome Smelting Companies Offering Low Prices - Committee

THE Portfolio Committee on Mines and Energy yesterday accused leading chrome smelting companies for offering small scale miners lower prices for supplying chrome ore compared to large companies.

The companies - Zimalloys, Zimasco, Oliken and Maranatha Ferrochrome - appeared before the committee yesterday to give evidence on the state of the industry. Uzumba representative, Cde Simbaneuta Mudarikwa (Zanu-PF), was the first to ask why the companies were segregating small-scale miners.

He accused the companies of reducing their prices soon after Government banned chrome ore exports in April.

"The day the ban was implemented the prices went down and as we speak now the Ministry of Mines is in the process of setting up price controls in the sector," he said.

Zimasco services director, Mr Josephat Zvaipa, said the disparities were as a result of the different costs incurred by the small scale and large scale miners.

"As I have said before we use a systematic method to come up with a fair price for the miners that takes into account, mining costs, administration costs, the cost of the ore and on top of that we agree on the margin.

"The differences that you talk about come up in that the big companies use machinery in their production so the price they are classified is in a different category from the small scale miners," he said.

However, Redcliff legislator, Mr Isheunesu Muza (MDC-T), said the practice by the companies was tantamount to enslavement of the small-scale miners.

"What you are doing is tantamount to enslavement of small scale miners. If you were selling your products in a segregatory manner that would have been understandable.

"What we want is for you to assist in the development of those who are upcoming otherwise what do you use to value their manual labour," he said.

Zimasco group mining executive, Mr Reason Mandimika, said they had identified some small scale miners they were providing assistance to help them grow. The companies welcomed the chrome ore exports ban saying it would benefit local value addition.

Mr Zvaipa said while Zimbabwe had the second largest reserves of chrome in the world, it had been overtaken by China as producer of ferrochrome. He said China was importing large quantities of chrome ore and would end up pushing prices down if nothing was done to control ore exports.

He said in 2 000 Zimbabwe produced five percent of the world's ferrochrome but that had gone down to 1,5 percent in 2009, while China now accounted for 25 percent.

"In 10 years they have gone to 25 percent, we have gone down to 1,5 percent. They are getting the chrome ore from us who have it so we must value add and beneficiate to get more money.

"From a policy point of view our competitiveness is eroding and yet we are the biggest producers of the resource," Mr Zvaipa said.

He said the Chinese would end up controlling prices and push them down.

"Their policy is that they do not sell what they have and what they do not have they get it from us who have.

"The question is, is the ban good or bad? People are entitled to their opinions but the more we have as a producer to add value the better," he said.

Zimbabwe and South Africa have 72 percent of chrome deposits.

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