Can Zim­babwe’s small scale min­ers boost gold out­put?

Chronicle (Zimbabwe) - - Analysis/national News -

where gold is be­ing pro­duced open to il­le­gal buy­ers.

The yel­low metal is Zim­babwe’s sec­ond largest min­eral ex­port earner af­ter plat­inum and ca­pac­i­ta­tion of small scale pro­duc­ers wiil play a cru­cial role in in­creas­ing na­tional an­nual gold pro­duc­tion.

Be­tween 1980 and Au­gust this year, the coun­try ex­tracted only 586 tonnes of gold. Pro­duc­tion reached its peak in 1999 at 30,2 tonnes and was at its low­est in 2008 at only three tonnes.

But the ques­tion re­mains, will Zim­bab­wean small scale min­ers ever be able to push gold pro­duc­tion to the 1999 lev­els if they ac­cess th­ese fa­cil­i­ties?

And will they ever stop sell­ing their gold on the black mar­ket?

Small-scale min­ers say they can in­crease an­nual gold pro­duc­tion if they have the req­ui­site tech­nol­ogy and work­ing cap­i­tal to im­prove pro­duc­tion ef­fi­cien­cies.

But as things stand, there is still a sig­nif­i­cant amount of the yel­low metal be­ing smug­gled out­side the coun­try to be sold at higher prices than those ob­tain­ing in Zim­babwe.

With more than 700 000 small-scale gold min­ers, a huge chunk of which is still op­er­at­ing with­out min­ing li­cences, there is bound to be many leak­ages.

While Mr Dube agrees that more needs to be done to curb th­ese leak­ages, he says their ef­forts have so far been suc­cess­ful con­sid­er­ing the in­crease in sales to Fidelity Print­ers from an av­er­age of 200kg per month in 2013 to around 750kg be­ing sold cur­rently.

Of­fi­cial sta­tis­tics show that small-scale min­ers’ con­tri­bu­tion to out­put has been grad­u­ally in­creas­ing since 2014.

“In the last two years, there has been a lot of ef­fort by var­i­ous stake­hold­ers (in­clud­ing Fidelity) to en­cour­age small scale min­ers to sell their gold us­ing for­mal chan­nels rather than il­le­gal chan­nels. Also, re­moval of pre­sump­tive tax and re­duc­tion of roy­al­ties from five per­cent to one per­cent has gone a long way in en­cour­ag­ing small-scale min­ers to sell their gold to Fidelity,” Mr Dube said.

Af­ter Fidelity Print­ers was de­clared the coun­try’s sole gold buyer, pur­chases reached a monthly high of 790,4 kg in De­cem­ber 2015.

The to­tal bul­lion sold by the small-scale min­ers in 2015 was 86,4 per­cent up from 3,9 tonnes in the pre­vi­ous year to 7,3 tonnes.

For the eight months to Au­gust 2016 small-scale min­ers had sold a to­tal of 5,5 tonnes two tonnes less than sales from pri­mary gold pro­duc­ers who have sold 7,8 tonnes in the same pe­riod.

But while sales to Fidelity Print­ers have gone up, ex­perts be­lieve there is still more bul­lion be­ing sold on the black mar­ket es­pe­cially in ar­eas where Fidelity’s gold buy­ing cen­tres have not yet been es­tab­lished.

Zim­babwe Min­ers’ Fed­er­a­tion (ZMF) spokesper­son Mr Dos­man Mangisi says the leak­ages could be a re­sult of the slow process of for­mal­is­ing small-scale min­ers.

“The num­bers for gold sold through for­mal chan­nels have in­creased over the years and we are hop­ing to sup­ply a big­ger chunk of the tar­geted 24 tonnes this year. But the process of for­mal­i­sa­tion also needs to be ex­pe­dited so that all min­ers can sell gold to Fidelity. If we map and scale them we will min­imise leak­ages. They will also be able to get as­sis­tance in terms of ma­chin­ery and mar­ket­ing their prod­uct,” he says.

Mr Mangisi also said a for­malised small-scale sec­tor would also re­sult in less dis­putes such as the one at Dur­ban Gold Mine in Bubi Dis­trict where 300 il­le­gal min­ers re­cently in­vaded the dis­used mine.

He said the ore ex­tracted un­der such sit­u­a­tions would never be ac­counted for as the min­ers want to sell to smug­glers to avoid de­tec­tion by po­lice.

He be­lieves the $20 mil­lion fa­cil­ity availed by the cen­tral bank is a shot in the arm for small-scale min­ers who are in des­per­ate need of mech­a­ni­sa­tion.

The plan to mech­a­nise small-scale gold min­ing is part of a raft of new mea­sures to de­crim­i­nalise ac­tiv­i­ties in the sec­tor to in­crease de­liv­er­ies to Fidelity Print­ers.

If they ac­cess the fa­cil­ity, small-scale min­ers will be obliged to meet Gov­ern­ment half­way and sell their gold to Fidelity. Gov­ern­ment on its part has a big­ger role to play. It has to make sure that the fa­cil­ity is man­aged prop­erly and that min­ers in ev­ery part of the coun­try equally ben­e­fit from the ma­chin­ery. It can­not con­cen­trate on a few min­ing towns and ne­glect nu­mer­ous other ar­eas where gold min­ing is tak­ing place.

More than that, there has to be a sys­tem in place that will en­sure that those who ben­e­fit from the fa­cil­ity sell all their gold for­mally.

But sell­ing gold for­mally has been com­ing with huge costs that most min­ers could not af­ford. The tax­a­tion and fee struc­ture was too steep.

Un­til the in­ter­ven­tions by the cen­tral bank chief, that is.

Dr Man­gudya pro­posed to scrap a two per­cent En­vi­ron­men­tal Man­age­ment Agency (EMA) fee.

“The fee for ex­ploit­ing the en­vi­ron­ment at two per­cent of gross rev­enue is ex­tremely high. Con­sid­er­a­tion should be made to scrap this fee in or­der to en­hance gold pro­duc­tion,” said Dr Man­gudya.

He also pro­posed to re­duce the En­vi­ron­ment Im­pact Assess­ment fee to a rate of 0.05 per­cent of the project cost from a rate of up to 1.2 per­cent.

He also sug­gested a re­duc­tion of the cus­tom milling fee from the cur­rent $8 000 to make sure that all millers sell their gold on the for­mal chan­nel.

The min­ers say th­ese mea­sures will make their work eas­ier and pro­mote gold pro­cess­ing which in turn in­creases value of the yel­low metal.

Said Mr Mangisi: “We have the ca­pac­ity to ex­tract gold but what we do not have ca­pac­ity for is pro­cess­ing. Re­duc­ing cus­tom milling fees means we will have more millers be­cause the cur­rent 51 are not enough to process all the ore small-scale min­ers ex­tract.”

And com­mit­ment from both small-scale min­ers and Gov­ern­ment, the gold sec­tor can be­come more or­gan­ised with an ef­fi­cient value chain which will drive the economic re­cov­ery of Zim­babwe. — Zim­pa­pers Syn­di­ca­tion.

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