CHAMBER of Mines president Winston Chitando says contrary to government’s repeated calls that the country’s minerals must be beneficiated, most were already value added except platinum.
Chitando told businessdigest on the sidelines of the Association of Chartered Certified Accountants (ACCA) annual conference held in Victoria Falls last week that almost all minerals in Zimbabwe were value added, arguing the only missing link was the capitalisation and full utilisation of existing infrastructure.
Government has of late been vocal on value addition and mineral beneficiation.
Chitando said value addition for gold, for instance, must not be a challenge, given that the Reserve Bank of Zimbabwe-owned Fidelity Printers already had an existing beneficiation plant that only needed to be recapitalised.
He proposed government also set aside a quota for diamonds that would be polished locally as a move towards value addition and beneficiation of the mineral.
Minerals such as nickel, copper and chrome already had existing beneficiation infrastructure, all of which needed refurbishment, Chitando pointed out.
On platinum, Chitando said establishing a refinery for the mineral would require US$2 billion while the same amount could alternatively be used to finance expansion projects four times bigger than Mimosa.
The Chamber of Mines president said mining companies in Zimbabwe had of late been reluctant to embark on capital-intensive projects such as exploration due to lack of capital, a major risk threatening the growth of the industry.
This was coupled with the rising costs of production attributed to a 60% increase in electricity charges, a 100% hike in royalty fees and a 5 000% increase in ground rental fees. This rendered the Zimbabwe platinum-mining industry uncompetitive, considering the falling prices of the metal globally.
Platinum mining giant Zimplats last week reported a 39% reduction in profit and partly attributed the drop to a downward trend in platinum prices and increasing operating costs worsened by uncertainty, especially in the implementation of the indigenisation law.
Chitando said the increased royalty fees were a serious threat to the sustainability of the mining industry in Zimbabwe as they were too high and as a result had compromised operations of mining companies.
“Mimosa for example has a 20-year mining plan and each time there is a change in royalty fees you have to revisit the plan,” Chitando complained.
“The uncertainty surrounding the increase in royalties is completely devastating to the mining industry in Zimbabwe, we just have to get our act right for the industry to realise its full potential in the revival of the economy,”
Zimbabwe’s mining sector is said to be the major driver of economic growth, contributing more than 13% to GDP and accounting for more than 50% of total exports.
The sector is anticipated to grow by 16,7% this year although it is facing a myriad of challenges as uncertainty surrounding the implementation of the indigenisation law continues to threaten foreign direct investment into the sector.
Chitando said the industry was in dire need of investment and was operating below capacity.