Zimbabwe: High Costs Force Indigenous Miners to Lease Chrome Mines to Chinese

Zimbabwe Miners Federation President Henrietta Rushwaya (file photo).

The Zimbabwe Miners Federation (ZMF) says the indigenous miners are leasing the controlling stake of their mines to foreigners because they do not have adequate resources to keep in business while some are selling the mineral to illegal buyers who offer hard currency, among other challenges confronting the sector.

Speaking to NewZimbabwe.com Business Thursday, ZMF president Henrietta Rushwaya said that lack of capital and adequate mechanisation is pushing miners towards desperate alternatives.

"Indigenous miners are surrendering controlling stakes of their mines in order to stay in business and the disadvantages of this is that revenue generated from production is shifted to the majority stakeholders and buyers which is then repatriated out of Zimbabwe," she said.

She said that foreign currency revenue is reduced and chrome producers become further undercapitalised.

The small scale miners' boss also bemoaned the current low predatory domestic market prices offered which she said leaves Zimbabwean chrome producer's growth vulnerable, with the limited opportunity to grow primarily dependent on foreign direct investment at the expense of the indigenous investor.

"At least US$30 to US$70 per tonne in foreign currency revenue is lost to buying cartels and this adversely chokes plans to invest in value addition. Crippling foreign currency retention rates which currently stand at 50% also worsens the situation as miners will not be able to acquire highly mechanised equipment," she said.

Rushwaya also bemoaned the poor state of the country's roads which she said is reducing the amount of chrome which can be safely transported resulting in higher cost per tonne logistics cost.

"Higher logistics costs are considered by the buyer and impact the amount purchased as well as profitability. Apart from this, the Vehicle Inspection Depot weighbridge's exorbitant charges which can equate to US$7, 27 per tonne deters buyers from making purchases in areas which are not serviced by independent weighbridge operators.

"Moreso, high costs of running generators in areas which do not have access to electricity experience higher production costs which reduces capital investments, she added.

More From: New Zimbabwe

Don't Miss

AllAfrica publishes around 800 reports a day from more than 130 news organizations and over 500 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.