Countryreport Zimbabwe
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- Published: Thursday, 13 April 2017 12:51
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COUNTRY REPORT: CHALLENGES BEDEVILING ZIMBABWEAN SMALL SCALE MINING SECTOR
Prepared By: Blessing Mupaya
The challenges being experienced by small scale miners in Zimbabwe could not be fully explained outside the context of the general mining landscape in Zimbabwe. While there is a rebound in Zimbabwe's gold production, with chrome, platinum, nickel, coal and diamonds contributing towards the growth of the industry, Zimbabwe's mining sector has not been spared from the global economic meltdown. High production costs, reduced earnings, absence of long term finance, high exploration fees, unaffordable royalty payments, lack of equipment, policy inconsistencies and poor working environment are factors threatening the expansion of the extractive industry in Zimbabwe.
High Production Costs-The mining industry is experiencing production constraints that are hindering growth prospects in the long term. Viability in small scale mining may have been compromised as the cost of production has not been coming down, instead the costs have been going up.
Reduced Earnings- While small scale mining plays a critical role in terms of contributions to the government in the form of taxes, royalties and corporate social responsibility investments in communities they operate, depressed global mineral prices are making it difficult for artisanal miners to operate at profitable levels to be viable amid high production costs.
Absence of Long Term Finance- Although some banking institutions have mobilised offshore loans from multilateral financiers for onlending to the mining industry, it has however not been easy for players in the sector to access the funds. Mining as a capital intensive industry also requires huge sums of funds, a development that has lead to several emerging miners failing to venture into the sectors. The financial products on offer are short term and limited, only available for working and hence artisanal miners are finding it difficult to develop their claims.
High Exploration Charges- We have high mining fees being charged by Ministry of Mines and Mining Development, Environmental Management Authority and other stakeholders that the young miners industry cannot afford. A small-scale miner is required to pay $1 500 for registration and $8 000 for a milling license and use of explosives is pegged at $1 000. Environmental Management Agency (EMA) also requires an environmental impact assessment certificate before mining activities commences which costs between $3 000 and $10 000. EMA also requires two certificates on hazardous chemical and waste management which range from $500 to $1 000. Rural District Councils also charge between $200 to over $1 000 to miners.
Unaffordable royalty payments- Royalties, mining fees and other charges have remained high compared to regional rates, even after government took steps in the 2014 mid-term fiscal policy statement to implement reforms.
Lack of Equipment- Small-scale miners are also struggling to reach full potential due to shortage of mining equipment, use outdated technologies, lack of infrastructure and expertise. Thus, inadequate mining and milling equipment were hampering artisanal and small-scale miners' efforts to effectively contribute on the country's mineral output.
Policy inconsistencies-The tiff between the Zimbabwean Indigenisation and Economic Empowerment and investment has been deterring investment in the mining sector. Policy inconsistencies have instilled speculative tendencies by investors with regards to the operating environment leading to lack of commitment on the ground. Thus, small scale miners are struggling to attract investors to finance their ventures.
Poor working environment-Safety has always been a concern in the small-scale mining activities and there are rampant reports of cases of miners dying or getting seriously injured during processes of gold ore extraction.