9 November 2012

Zimbabwe: Make Every Mineral Count


Two significant announcements were made this week, all of which have a bearing on the economy and livelihoods and bid us all to close ranks against those who have declared economic war on our people.

The first was the announcement by Zimbabwe Mining Development Corporation chairman Mr Godwills Masimirembwa that the diamond industry was expected to contribute only a quarter of the US$600 million that Treasury had projected would come from the sector this year.

The ZMDC boss said only US$150 million was going to be remitted to Treasury by year-end due to the effects of sanctions on companies mining in Chiadzwa.

The second announcement was by Kimberley Process Certification Scheme monitor Mr Abbey Chikane that diamond mining at Chiadzwa had attained international standards and can be used as a model operation.

Mr Chikane's endorsement, that came in the run up to the World Diamond Conference that convenes in Victoria Falls next week, naturally put paid to the sanctions the US imposed on diamond mining companies with a view to precluding the sell of the gems on the international market.

To this end we urge the US and its allies to stand guided by the KPCS endorsement and remove the ruinous embargo that has severely curtailed diamond revenue.

As the ZMDC boss pointed out, the sanctions are giving our country a limited customer base and in so doing affecting the prices at which we can sell the gems.

And to make matters worse the constrained market is under threat of sanctions from the US Office of Foreign Assets Control that punishes all who buy our diamonds.

Because of the sanctions regime, Finance Minister Tendai Biti was forced to make a downward review of the national budget in his mid-term fiscal policy review to US$3,64 billion from US$4 billion, citing poor revenue inflows.

He also had to review this year's Gross Domestic Product growth projection from 9,4 percent to 5,6 percent.

And with news coming from ZMDC coming just a week before the presentation of the 2013 national budget, it's evident Treasury has to walk a tight rope.

We urge the Finance Minister to urge his colleagues at party level not to pay lip service to the issue of economic sanctions. Sanctions exist, they are real and have starved the national purse.

We also call on Government to look beyond diamonds. All other minerals must significantly feed into the fiscus. If we are at all serious about attaining the US$100 billion economy that the Finance Ministry loves to harp about, then we need to take stock of what we have and ensure that we benefit from every mineral the way the Chiadzwa gems are breathing life into our economy.

Minister Biti is on record saying there is a chasm between what the Ministry of Finance is getting from diamonds - and other minerals - and what he believes is actually being produced and exported.

He revealed that the fiscus got US$80 million from diamonds in 2010 and was year expecting more than US$600 million. Contrast this with the US$150 million the country reportedly earned from all other minerals combined in 2011 against mining exports valued at US$2,5 billion and you get the feeling we are ignorantly throwing our minerals away and being content with meagre returns.

Take for instance the case of Zimplats which is exporting more than 100 000 ounces of platinum each year. With platinum going for US$1 699 per ounce, it means we are giving South Africa US$170 million every year, and this is just one mine, Zimplats

How does that compare to the US$150 million remitted to Treasury by all the mines? What more is Impala Platinum, the holding company for Zimplats, expects to ship out 100 000 ounces per year for the next 50 years which translates to US$8,5 billion of our money feeding into the South African economy.

Given the fact Zimplats has stubbornly refused to set-up a smelter, we are also exporting jobs and other platinum by-products that would significantly feed into this figure of US$8,5 billion.

The question is how much has Zimplats contributed to the fiscus?

We would love to hear it from Minister Biti who loves to harp about a sanctions-burdened Chiadzwa that is sustaining an economy being bled by a largely unsupervised mining sector.

It is time every mine justified its existence.

Copyright © 2012 The Herald. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.