Analysing restrictions on the export of unbeneficiated base mineral ores from Zim part 1
ZIMBABWE is a very rich country endowed with a highly diversified mining sector of over forty (40) mineable resources including, but not limited to, lithium, asbestos, iron ore, gold, diamonds, coal, gemstones, granite, manganese, chrome, and copper. The mining sector contributes significantly to the country’s export earnings. Zimbabwe’s mining sector presents a great opportunity for investment opportunities which can do wonders for the country. The sector is currently under the control of the Ministry of Mines and Mining Development.
Zimbabwe’s base mineral export regime
Dealings in minerals in Zimbabwe are statutorily regulated. Concerning the export regime, which is the subject of this article, it is important to note from the onset that the exportation of minerals from Zimbabwe is heavily restricted. In terms of section 2 of the Mines and Minerals Act [Chapter 21:05] the dominium in and the right of searching and mining for and disposing of all minerals, mineral oils and natural gases is vested in His Excellency the President of Zimbabwe. The Mines and Minerals Act regulates searching, exploration and exploitation of mineral deposits amongst other things.
The Precious Stones Trade Act [Chapter 21:06] regulates the possession of and dealing in precious stones which includes rough or uncut diamonds, or rough or uncut emeralds. This Act prohibits any person from buying, selling, bartering, exchanging, giving, receiving, or possessing precious stones unless such person is licensed or holds a permit. Further, the Gold Trade Act [Chapter 21:03] prohibits dealing in or possession of gold by persons except those who hold a licence or permit, or those who have mining rights under the Mines and Minerals Act [Chapter 21:05].
All mineral exports are controlled by two state-owned marketing monopolies, the Minerals Marketing Corporation of Zimbabwe (MMCZ), and Fidelity Printers and Refiners Limited. It is a norm that all persons are required to export all minerals (except gold) through the MMCZ. This is so because the Minerals Marketing Corporation of Zimbabwe Act [Chapter 21:04] prohibits the sale or export of minerals otherwise than through MMCZ. The MMCZ was established in 1983 for the purpose of reducing transfer pricing abuses and has the sole authority under the Minerals Marketing Corporation of Zimbabwe Act [Chapter 21:04] to market and sell all domestically produced minerals (except silver and gold). Gold must be sold to the Reserve Bank of Zimbabwe’s subsidiary Fidelity Printers and Refiners Private Limited. Fidelity Printers and Refinery is a security printing and gold refinery company which is solely owned by the Reserve Bank of Zimbabwe.
The Base Minerals Export Control Act [Chapter 21:01], regulates the export of base minerals from Zimbabwe. In terms of this Act, the Minister of Mines and Mining Development has the authority to make orders prohibiting, regulating, and controlling the export of base minerals; and to implement export permit requirements. This has meant the export of the country’s abundant mining and agriculture products predominantly in raw form, and the loss of regional exports notwithstanding its strategic geographical positioning at the heart of growing regional Comesa and Sadc markets.
It is generally assumed that by putting restraints on the export of raw minerals, governments hope to divert these materials to the domestic market, thereby supporting local activities to process these materials and create employment. It has been argued that restricting exports of natural resources may give downstream producers just the edge they need to stay above the curve in fiercely competitive international markets. Both developing and developed countries resort to export restrictions imposed in the form of export taxes, quantitative restrictions through quotas and licences, and outright export bans.
Under the Transitional Stabilisation Programme, Zimbabwe’s Reforms Agenda, 2018, Zimbabwe’s mining policy is aimed at stimulating the mining sector by promoting the re-opening of closed mines, expansion of mines currently operating below capacity, the opening of new mines, beneficiation, and value addition, through domestic smelting and refining to increase earnings from mineral resources. It is important to note that beneficiation remains a key element of government mining policy. In terms of the Transitional Stabilisation Programme, Zimbabwe’s Reforms Agenda, 2018, mining beneficiation and value addition of minerals such as platinum, chrome, lithium, nickel, diamond, copper, gold, and coal offer immediate scope for income and exports generation for the country. In summary, the stabilisation programme stipulates that the overall benefits of beneficiating raw mining ore include the domestication of value-added products, as refinery and smelter plants are set up locally, the realisation of higher export proceeds, on account of beneficiated goods, cushioning the economy from effects of price fluctuations associated with commodities, enhance opportunities for import substitution, as the domestic value chain spreads and increase mining contribution to government tax revenue.
In light of the foregoing, the beneficiation policy has been enforced, through export bans, export restrictions, and export taxes, aimed at making these inputs available to local industries. Thus, this may explain why the order in Statutory Instrument 05 of 2023 (SI 05 of 23) was issued as shall be discussed below.
Base minerals export control (unbeneficiated base mineral ores) order, 2023
In terms of section 3(1)(a) of the Base Minerals Export Control Act [Chapter 21:01] (“the Act”), the Minister of Mines and Mining Development made an order known as the “Base Minerals Export Control (Unbeneficiated Base Mineral Ores) Order, 2023” published in Statutory Instrument 05 of 2023 (hereafter “SI 05”). The said order imposes rigid restrictions on the export of unbeneficiated base mineral ores. It is aimed at curbing the rampant exportation of raw minerals and enhance domestic value addition.