Minister of Mines Walter Chidhakwa
MINES and Mining Development minister Walter Chidhakwa says there has been resistance, by some diamond miners, of the proposed consolidation of companies in the subsector as most risk losing out on shareholding as they did not make significant investment into their operations.
Seven companies operating in Marange namely Mbada Diamonds, Anjin, Marange Resources, Gye Nyame, Kusena, Jinan and the Diamond Mining Company are set to merge into one entity where Government will hold 50 percent.
Chidhakwa told the 2015 Zimbabwe Mining and Infrastructure Indaba that the firms misrepresented that they had invested significantly into mining equipment and machinery, yet they leased the equipment and had little value of their own on their balance sheets.
Chidhakwa said despite resistance, Government is not going to look back. “The drastic fall in diamond production calls for swift action as the companies have not invested beyond alluvial.
“Companies did not bring in the required capital for exploration as they concentrated on alluvial mining, that is why as Government we are moving to consolidate the companies to save the future of the sector and we are not looking back. Our position is that Government has enunciated a policy, and that policy is that we will have one diamond mining company in this country,” he said.
Chidhakwa said the consolidation model which is based on valuations of equipment and other investments will see other companies getting minimal shareholding as they were using hired equipment. “We needed to develop a model for bringing the companies together and we started with the valuations which unearthed such issues,” he said.
He said exploration holds the key to the future of the diamond sector as there are indications there are between 105 and 150 kimberlitic pipes in the mining area of Chiadzwa.
Chidhakwa said of all the mineral sectors in the country, it’s the diamond sector which is in shambles as there is a lot of misrepresentation.
The minister said Zimbabwe has put in place different policies that will enable it to achieve set targets under the country’s economic blueprint, ZimAsset. “The success of this blueprint is mainly hinged on exploration and beneficiation in the mining sector, that way the country will fully benefit from mining,” he said.
To address some of the issues affecting the mining sector, Chidhakwa, said Government is finalising amendments to the Mines and Minerals Act which will soon be tabled before parliament. “This will guarantee mineral exploration, give mines long tenure to mining leases and address issues of levies and taxes,” he said.
He said this will also lead to the completion of the computerised cadastral system that will see improved systems in applications and management of leases and claims. Earlier on, Ministry Secretary Professor Francis Gudyanga had indicated that government is in the process of raising the $2.5 mln required to complete the cadastral project.
Other Bills Chidhakwa noted include the Pan African University and Exploration Bills which have since been approved by Cabinet and are now waiting to go before Parliament.
He said a few companies have been holding onto large tracks of land with claims and not using them. “For instance in chrome mining there are two large companies holding on to claims and Government has since engaged them to release the ground.
“At peak we used to export 600 tonnes of ferrochrome, so we want to have more players in the sector.”
He noted that platinum miners have since released ground to Government which will be given to other prospective investors. “Likewise we are also calling on the two chrome mining companies, Zimasco and ZimAlloys, to do the same so that production increases,” the minister said.
Meanwhile, the Chamber of Mines Zimbabwe (CoMZ) says Zimbabwe’s mining industry requires in excess of US$4 billion over the next five years to achieve full capacity as well as to fund expansion projects.
CoMZ president Toindepi Muganyi told the 7th Zimbabwe Mining and Infrastructure Indaba 2015 that strategies linked to the investment climate, fiscal and tax reforms in Zimbabwe will result in the opening up of lines of credit for the mining sector.
He said of the US$4 billion required, the platinum sector needs at least US$2,8 billion while gold requires US$0,6 billion to produce 22 tonnes and 30 tonnes respectively by the year 2020.
Coal and Chrome require US$0,42 billion and US$0,038 billion respectively. This will result in the two minerals each producing 18 million tonnes and 1,3 million tonnes respectively in the next five years.
Muganyi said nickel requires at least US$0,028 billion to produce 27 tonnes by 2020.
He said other strategies to increase mineral production include those associated with the untapped potential of the small scale sector, formalising the artisanal miners and mobilising funding and strategies linked to deepening mining industry linkages with the rest of the economy.
“There is also need to pursue a reasonable and practical PGM beneficiation path and eliminate obstacles to sustained beneficiation faced by base metals and chrome industry,” he said.
Muganyi said gold, PGMs and diamonds contribute more than 80% of mineral revenue and the decline in volume of diamonds will have a significant impact to mineral revenue apart from price.
He said the mining sector’s 10 percent contribution to GDP directly generated over US$9 billion since 2009 while the sector constitutes 53 percent of the nation’s total exports at US$10,5 billion from 2009 to 2014.
Muganyi said while government is relaxing and amending some regulatory, fiscal and tax laws in light of mining viability challenges and growth stagnation, there are still some issues that need finalization.
“The current fiscal and tax modelling reflect a strong correlation of mining sector performance and contribution to new capital. There is convergence in the PGM beneficiation conversation.
“However, some areas remain work in progress to improve the investment climate, regulatory framework, fiscal and tax framework and structural reforms for the mining industry,” he said.
These include finalisation of the Mines and Minerals Act, development of the mining cadastre system and alignment and rationalisation of multiple taxes and levies by other government agencies. -FinX