HomeBusiness DigestChrome ore drives illicit flows

Chrome ore drives illicit flows

Melody Chikono

GOVERNMENT has been earning in excess of US$15 million per year in chrome ore exports, but has been losing even more than that as companies smuggle out chrome ore hidden in sand and fail to declare the full amount produced and exported, according to an investigation by this newspaper.

Chrome is one of Zimbabwe’s main exports after gold, platinum group metals and diamonds. An Action for Southern Africa (ACTSA) August 2019 report says trade-related illicit financial outflows from southern Africa were estimated at US$8,8 billion in 2015 alone, with the whole African continent losing US$50 billion annually in illicit financial flows.

Most of the money is being lost to trade misinvoicing and smuggling.Misinvoicing is the deliberate falsification of the value, volume, and/or type of commodity in an international commercial transaction of goods or services. It is a major part of illicit financial flows (IFFs), the illegal movement of money from one country to another.

Chrome ore is one of the minerals involved. Chrome is used to make stainless steel and in other industrial applications. Investigations carried out by the Zimbabwe Independent suggest there has been a scramble for chrome ore in the Great Dyke, with some exporters believed to be shipping vast amounts of soil containing the ore under the veil of secrecy.

According to miners in Lalapansi, some companies ship the soil outside the country, then extract the mineral from it. “These people have gone to the extent of exporting sand around chrome resources,” Reason Gora, a small-scale miner in Lalapansi, said.

Gora said although there was a growing number of foreign buyers, they were colluding and forcing the price of chrome down. “We used to sell to Zimbabwe Alloys but it has since closed. Zimasco is buying from those that have its claims,” he said. “We are producing more but getting little. We are losing out more as a country. Government should do something about it.”

In 2015, government reversed a ban on the export of chrome ore — which had been introduced in 2011 in an effort to force miners to process the mineral in Zimbabwe and export more valuable ferrochrome instead.

But a second ban has since been under discussion, with the former Mines minister Walter Chidakwa disclosing in 2017 that the country was losing millions of dollars in potential revenue by allowing chrome miners to export the mineral in its raw form instead of beneficiated ferrochrome, which fetches a higher price on the international market.

Current Mines minister Winston Chitando has been overseeing the development of chrome development policy that promotes processing the chrome ore locally. It is expected to drive growth in the industry with a thrust to increasing local production of ferrochrome by 20% in 2019 to 418 000 tonnes, up from 350 000 last year.

He said this while addressing mining experts and potential investors at the 35th International Chromium Development Association (ICDA) in Victoria Falls in May this year.

“More exploration and capital is required to upgrade the reserves and increase underground production,” he said.“While 2018 production of around
350 000 tonnes was a new record for the country, new capacity being commissioned and planned for commissioning within the year could see a 20 percent increase of ferrochrome production capacity to 418 000 tonnes in 2019. The country will also realise more income by exporting ferrochrome than raw chrome.”

A visit by the Independent to Bunday Technical Mining, a Chinese company active in Lalapansi, showed a hive of activity, with containers being sealed and other trucks carrying chrome ore. However, Chinese workmen there said they were not authorised to speak to media, and efforts to get an official comment from management were fruitless.

Bunday Technical is not the only company believed to be working there. Afrochine, Jinan SanHe and Dinglee are also buyers of chrome in the region.

At the Afrochine plant in Lalapansi, small particles of chrome ore known as chrome fines are washed using a technology called spirals that separates them from surrounding sand. Afrochine is one of the few companies that conduct chrome ore smelting in Zimbabwe.

The Independent contacted Afrochine in Lalapansi, but management there did not respond to requests for an interview.Godfrey Mafusire, a mine manager at China Zim which also works in the chrome sector, attributed any misdeeds to Chinese buyers rather than local miners. On allegations of soil being shipped as a means of smuggling, Mafusire said it was happening but he did not make clear which companies he was talking about. “It is true,” he said.

“It’s only that some locals do not know what it is exactly. They are shipping chrome fines. They are depriving us a lot.”l This story was produced by Zimbabwe Independent. It was written as part of the Wealth of Nations, a media skills development programme run by the Thomson Reuters Foundation. More information at www.wealth-of-nations.org. The content is the sole responsibility of the author and publisher.

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