AfDB calls for transparency

REGIONAL development bank, the African Development Bank (AfDB), has urged Zimbabwe to be transparent in its ongoing consolidation of diamond companies operating in Marange in order to boost investor confidence as part of numerous mining recommendations to the southern African country.

Taurai Mangudhla

The process, which is expected to merge all companies operating in the area into a single entity, was proposed as one of the means to plug leakages and increase the prospects of raising fresh capital.
Under the new proposal government, through the Zimbabwe Mining Development Corporation, will own 50% of the merged entity while the other shareholders will share the remaining equity.

There are four mining companies operating in Marange — Anjin Diamond Mining Corporation, Jinan Mining Private Ltd, Marange Resources and Mbada Diamonds — after Gye Nyame and Kusena went under. Gye Nyame and Kusena will be taken over by wholly government-owned Marange Resources.

“There is need for a transparent process in the transformation of shareholding in the consolidated company in order to maintain confidence and attract capital in the diamond sector,” said AfDB in the March 2015 Zimbabwe Monthly Economic Report.

“This may entail provision of timelines which facilitate a smooth change-over in the mining concerns.”

The merger, according to AfDB, takes a cue from other countries that have amalgamated diamond firms such as Angola (Endiama, the national diamond company), Botswana (Debswana National Diamond Corporation) and Namibia (Namdeb Diamond Corporation).

Revenues from Zimbabwe’s diamond mining operations continue to underperform and have caused successive downward budget reviews.

Total government revenue outturn for February 2015 amounted to US$256,37 million against a target of US$286,74 million. The AfDB report shows that performance of the various revenue heads was lower than expected as the tax base continues to shrink owing to depressed economic activity.

For instance, tax revenues were 9,8% below set targets while tax on income and profits was 15,6% below target. Customs duties and other indirect taxes were 12, 9% and 29,4% below targets respectively.
The AfDB also urged the country to take advantage of global platinum supply deficits.

According to the report, total global demand for platinum is predicted to increase led by a growth in industrial demand of 9%.
“However, the global platinum market is expected to remain in deficit at 235koz in 2015.

“This provides opportunity for Zimbabwe platinum mining firms to capitalise on the persistent deficit in the global market and increase production through expansion projects since demand is outweighing supply,” reads part of the report.

On gold production, AfDB said the implementation of beneficiation and value addition being advocated by government of Zimbabwe and in line with the Africa mining vision will diversify risk away from the export of low value raw minerals to value added products like jewellery.

The regional bank, however, said the process needs to be done in a way as to extract value from domestic, regional and global value chains.

“This will provide a hedge against price fluctuations on the international market (given that) volatility in precious metals prices has remained a challenge for economies dependent on mining,” said the AfDB.

According to figures obtained from the central bank’s gold buying and selling arm, Fidelity Refiners and Printers, Zimbabwe’s total gold deliveries increased substantially by about 48,6 % to 1 546,16kg on a year-on-year basis, in March 2015, from 1 040,49kg in March 2014, driven by a significant increase in small-scale miners deliveries.

Deliveries by both primary producers and small-scale miners increased by 20,8% tonnes and 142,3% to 969,64kg and 576,53kg, respectively during the same period.

On a month-on-month basis, total gold deliveries increased by 32,2% to 1 546,16 kg in March 2015 compared to February 2015. Monthly deliveries by primary producers increased by 29% to 969,63kg in March 2015, while deliveries by small-scale producers increased by 37,97% to 576,5kg in March 2015.

Despite the increase in gold deliveries declining international gold prices since January 2015 are cause for concern as they reduces the overall value of gold.

Last week Mines minister Walter Chidhakwa lifted a ban on chrome ore exports and cut royalties on the mineral by three percentage points to 5% with a view to grow foreign currency earnings.

Regional think tank NKC African Economics said Zimbabwe is intensifying its efforts to make small policy adjustments — like the temporary lifting of the chrome ore export ban — in order to keep the local economy going, but is failing to make the big changes needed to generate sustainable high-pace growth.

NKC said the export ban implemented over the past four years has not been a significant stimulant towards increasing local refining capacity and output due to a myriad of other challenges faced by both small and large chrome producers.


Comments are closed.

AMH logo

© 2016 The Zimind. All Rights reserved.