HomeAnalysisGovt plans mines crackdown

Govt plans mines crackdown

SHAME MAKOSHORI
THE Zimbabwe government said on Thursday it was moving to aggressively enforce a “Responsible Mining Initiative” announced last year to stem tax evasion and smuggling in the country, which has been losing US$1,5 billion a year to backstage gold deals.

Mines and Mining Development minister, Winston Chitando told the Zimbabwe Chamber of Mines’ annual mining conference in Victoria Falls that in the weeks ahead, he would be cracking the whip on transgressors, but did not specify his game plan.

Chitando, who had until now avoided confrontations with mines since coming into office in 2018, is determined to achieve the ambitious target he set out back then, to scale up output to US$12 billion by 2023.

That would be sixfold the estimated US$2 billion output four years ago.

But the ambition has recently come under pressure due to general plunder, which has been blamed on several missteps.

“In 2021, the government came up with the responsible mining initiative, which we will be enforcing in the next few weeks,” Chitando said in a keynote address.

“Mining companies must pay tax. They must respect the country’s laws and they must protect the environment. People are getting licences for claims and going on to mine before getting the EmaA (Environmental Management Agency)’s go-ahead,” the Mines minister said, noting the government would be tightening the screws on borders to stem rampant mineral smuggling.

“It (enforcing the initiative) is an issue we are coming down heavily on in the next few weeks. We’ll be coming up with a programme to ensure that all mining entities comply with the laws of the country,” the minister said, as he shot down suggestions that his US$12 billion mining vision was under threat.

Under the strategy, the government set out to drive mining revenue up to US$12 billion by next year, from about US$2 billion when the announcement was made in 2019.

Miners raised output to about US$5 billion last year, falling US$7 billion short of the target, after pandemic curbs affected a sea of industries that feed into the sector.

But Chitando said he was confident miners were on target to achieve the targets, even as gold miners cut production targets to US$3,5 billion in five years, from the US$4 billion originally planned for 2023.

“When we look at our US$12-billion target, the target for gold was US$4 billion. We are on course to achieve the US$12 billion projection. Some minerals will achieve the projected target, while others may not, but the US$12 billion will be on course to be achieved,” he said.

Presenting during a special symposium on gold mining during the conference, Qhubeka Nkoma, president of the Gold Miners Association, said output from the Southern African country’s mines will rise to 60 tonnes in the next five years, generating US$3,5 billion at current prices.

This projection was below the figure of US$4 billion originally projected for 2023.

Nkomo outlined several issues that could hold back growth.

The 60-tonne target would be 74% higher than 35 tonnes of gold projected to be extracted this year, and double 31,5 tonnes of gold mined in 2021.

Until pandemic curbs rattled the industry in 2020, the industry had been on an upward trajectory, scaling up output to 35 tonnes in 2018, from 3,6 tonnes at the height of Zimbabwe’s hyperinflation-induced economic upheavals in 2008, according to Nkomo.

Extensive pandemic-induced dislocations in global supply chains from 2020, along with pandemic inspired hard lockdowns forced international freightliners to dock ships under efforts to prevent deadly contagion as millions contracted the disease.

Zimbabwe had laid out a tactical approach to keep its gold mines running during the upheavals in order to serve its faltering economy.

However, the bold decisions by foreign governments to halt global freightliners were felt on the domestic scene as Zimbabwe’s gold mines run on imported inputs like chemicals.

Nkomo said in the absence of further shocks, including domestic headwinds, gold miners were poised to recover at a quicker pace than previously projected.

“From 3,6 tonnes in 2008, gold output increased to 35 tonnes in 2018,” Nkomo said, as he made a presentation during a special symposium on gold mining during the conference.

“Gold rebounded strongly in 2021 to 35 tonnes, from 20,8 tonnes in 2020 based on a robust government framework. Revenues have been on a positive trajectory reaching US$1,8 billion in 2021. In 2022 gold will realise US$2,5 billion. Gold producers have the capacity to produce 60 tonnes in the next five years and generate US$3,5 billion at current prices,” Nkomo told delegates.

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