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Govt in efforts to save mining sector

Dumisani Muleya

GOVERNMENT and mining executives this week held an emerge-ncy meeting in a bid to save the declining mining sector from collapse.

dana, Arial, Helvetica, sans-serif”>Mines minister Edward Chindori-Chininga met Chamber of Mines of Zimbabwe officials in Harare on Tuesday to work out a plan to rescue the troubled sector which has deteriorated sharply over the past two years.

Chamber of Mines chief executive David Murangari confirmed the meeting but would not disclose details saying they were confidential.

“We met but we made an undertaking not to reveal the details of the meeting,” he said. “The issues we discussed are sensitive and we won’t disclose them.”

However, sources close to the talks said Chindori-Chininga and mining executives had discussed measures to save the key economic sector from danger.

The meeting focused on the government’s policies on the mining sector, the exchange rate, the foreign currency crisis, fuel and power shortages and spiralling inflation.

Zimbabwe’s mining sector shrank 7,1% last year, and the situation is expected to get worse this year.

A number of mines have either closed down or reduced operations while new projects have been put on hold.

Whereas in 1996 the mining sector contributed 4,5% to gross domestic product (GDP), the industry’s GDP contribution dropped to 3,9% in 2001 and 1,45% last year.

Zimbabwe’s GDP is about US$3,7 billion, two-thirds what it was in 1998 when it stood at US$5,4 billion. The economy contracted 11,9% last year and is expected to shrink by 7,2% this year.

The sector’s foreign exchange earnings capacity has also fallen from more than 30% of total net proceeds in recent years to 25%.

Minerals that recorded decreases in volumes last year include gold, black granite, coal, chromate, cobalt, graphite, iron ore, iron pyrites, lithium minerals, magnesite and nickel.

Zimbabwe produces base metals, platinum group metals, industrial metal and energy minerals. It has diamond and coal-bed methane reserves.

But gold production has been the worst affected due to the support price scheme that always lags operating costs, creating cash-flow problems for producers.

The shortage of foreign currency and the inefficiency of the gold pool facility set up to help companies acquire inputs have hit production.

Gold production is expected to tumble another 27,6% to 11 tonnes this year – reach its lowest level in 23 years.

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