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Mining sector under growing siege

ZIMBABWE’S mining sector is under siege as key minerals — diamonds, chrome and coal—are performing below par despite government’s previous efforts to institute reforms to ramp up production.

The forced merger earlier this year of Chiadzwa diamond mining companies Mbada Diamonds, Anjin Investments, Marange Resources, Diamond Mining Company, Kusena Diamonds, Jinan and Gye Nyame—to form the Zimbabwe Consolidated Diamond Company (ZCDC), has taken a knock.

Finance minister Patrick Chinamasa said the diamond consolidation project was struggling when presenting the mid-year fiscal policy statement yesterday.

He said that for the first six months to June 2016, the ZCDC produced a mere 972 765 carats against a target of 6 million carats.

“The relatively low output levels, against a target of 6 million carats, is attributed to the lack of adequate capital on the part of operating companies under ZCDC as well as reluctance by previous companies to merge into the newly formed company,” he said.

Chinamasa said since March 2016, the ZCDC has been the sole producer of diamonds at Chiadzwa diamond fields, producing during the period to June as follows: March, 218 274 carats; April, 261 646 carats; May, 120 686 carats; and June, 58 396 carats.

“Furthermore, the country is losing out on lost diamond production from the three concessions which are not yet operational. There is, therefore, need to expedite the consolidation of all the concessions under one roof,” said Chinamasa.

Meanwhile, the treasury boss said to enhance diamond production at Chiadzwa, negotiations are underway for ZCDC to acquire machinery from the Development Trust of Zimbabwe-Econendra of Russia (DTZ-OZGEO) as well as acquire additional modern equipment to enable the ZCDC to undertake conglomerate mining.

Chinamasa spoke also about production at Hwange colliery which has been nose diving with the coal miner producing on a contract basis (Mota Angil) on average only 150 000 tonnes per month, against potential capacity of about 300 000 tons, despite government efforts to support the company.

In its heyday, Hwange Colliery Company Limited was a formidable entity supporting all facets of Hwange town’s life, including provision of various services to a population of about 55 000.

The company incurred a loss of US$115 million in 2015 alone. Government is exploring the scope of shedding off some of Hwange Colliery’s non-core operations to the ministry of Local Government.

The colliery workforce is to be rationalised from the current 3 200 to levels commensurate with production.

Non-core operations at Hwange include provision of housing and related amenities, schools, and health facilities.

“This socio-economic burden on the colliery company is compromising its core business of coal mining, resulting in incurrence of perennial losses. The institution of reform measures that will address challenges related to mismanagement at Hwange are unavoidable. This is necessary to ensure that the company operates at optimum capacity, that way allowing coal production to meet both export and local demand,” Chinamasa said.

Hwange’s service delivery included facets usually associated with local and central government such as road maintenance, refuse collection, water and sewer reticulation, power generation, schools, health, housing, as well as recreational facilities which are not core to coal mining.

In addition, the company operated its own railway and road transport system, internal security and telephone system.

Chrome production has also taken a knock, after output declined to 69 281 tons, from 95 820 tonnes realised during the same period last year.

To enhance chrome production, Chinamasa said Government is pursuing the re-allocation of claims acquired from Zimasco to interested potential miners.

Furthermore, plans are underway to facilitate the setting up of small smelting facilities, leveraging on low operation costs to enhance the beneficiation and value addition of chrome ore.
However, the treasury boss said continued provision of reliable and affordable electricity is critical to sustainable development of value addition chrome and steel industries in the country.

“Attention is also being given towards redressing revenue leakages at border posts, as well as in other areas, including leakages involving such natural resource endowments as diamonds and gold,” Chinamasa said.— Fidelity Mhlanga

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