9 January 2014

Zimbabwe: Beneficiation: It's Not Business As Usual


Zimbabwe's export performance over the last few years has left a lot to be desired, largely due to failure to add value to products. Primary goods always fetch low prices that cheat the country of large sums of potential earnings. The harsh conditions that have characterised international markets, particularly for minerals and agricultural produce, give credence to the firm stance taken by Government for mining houses to build refineries so that minerals are not exported in their raw form.

Over the past decade there has been talk on the importance of value addition but this has not been followed through with tangible action.

However, things are changing and Government, as stated in the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim-Asset), now insists on local beneficiation to ensure international competitiveness.

Processed exports are assured of higher prices even in instances where markets are depressed.

Beneficiation is increasingly important at a time the economy needs to improve its balance of payments position, among other attendant benefits.Mining already accounts for about 50 percent of export earnings and simple mathematics tells us that much more could be earned through beneficiation.

Therefore, there should be no excuse not to build refineries and the earlier companies act, the better for us all. A two-year deadline given to platinum mining firms to build refineries is more than generous considering the profits they have been making over the years.

Mining projects are embarked on for the long haul, hence the US$3 billion needed to build a refinery is a guaranteed investment that will yield higher profits for everyone.

Zimbabwe has three major platinum producers - Zimplats, Mimosa and Unki - who produce a combined 430 000 ounces per year. Surely, they can raise the required funds in a relatively short space of time.

Their argument previously that Zimbabwe needs to produce at least 500 000 ounces to justify a refinery no longer holds water given current production levels.

Furthermore, their expansion programmes show that it is just a matter of time before they exceed production of 500 000 ounces.

The economy can ill-afford any more excuses from miners and we urge Government to stick to its deadline for the sake of the economy's well-being.

Mining firms should be good corporate citizens and contribute to national development. A better economy works well for them in terms of increased productivity and higher profits.

We anticipate that all the firms in the mining sector will have submitted their proposals to the Ministry of Mines by Saturday next week.

Failure to do so should elicit Government's wrath, but we do not want things to go that far.

We hope producers of nickel and chrome have also taken heed of the deadline set.

The fact that such refining processes have been done before, particularly during the colonial era means it can be done again. We also commend efforts to sanitise the diamond sector. The fact that a probe team has been set up to investigate operations in Chiadzwa while the riot act has been read to Marange resources sends the right message that it is no longer business as usual.

Zimbabwe should benefit from its resources and any corrupt practices that undermine these efforts should be nipped in the bud.

Furthermore, Zim-Asset is largely expected to be financed from local resources and the mining sector should naturally play a leading role.

Mining has been identified as the major economic pillar and so efforts to plug any leakages are commendable and should be stepped up.

In the past decade alone the economy has lost billions of dollars through smuggling, under-invoicing and such vices.

This cannot be allowed to continue.

The economy is expected to grow by an average six percent under Zim-Asset and this can be easily achieved if the mining sector plays its part.

We appeal to Government to enforce discipline in every sector of the economy so that we all work together to build our country.

This will translate to higher living standards for the generality of Zimbabweans, hence creating a conducive environment for business to operate viably.

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