THE export of a raw, unprocessed product has always been a defining feature of the granite stone industry.
Zimbabweans were getting a small fraction of the value of their black granite. It took over 50 years, but on July 8, 2022, the Zimbabwean government finally passed SI 127 of 2022, outlawing the export of unprocessed granite.
This was long overdue.
The President of Zimbabwe, Emmerson Mnangagwa had to instruct the Minister of Mines and Mining Development, Winston Chitando to issue such an SI.
Why would the president give such an instruction? Could it be that he has now realised what needs to be done?
Why now? Why did the Minister of Mines and Mining Development wait so long that the President had to order him to act?
It is no secret that civil society organisations, many institutions, and residents from the granite mining communities (Murewa, Mutoko, Mudzi, Uzumba and Mount Darwin) have always spoken out in support of such a prohibition.
Aside from that, the country is still waiting for the long-awaited Mines and Minerals Amendment Bill, which was introduced in 2012 but a decade later, is yet to be approved.
On July 12, 2022, a few days after publishing SI 127 of 2022, the cabinet accepted that amended bill, which still needs to be approved by parliament before it becomes public.
Why, once again, could the president and the minister not wait for the bill’s approval? Does this imply that it does not handle this issue? If such is the case, why must we continue to handle mining concerns through statutory instruments and policies without enacting the proposed bill?
This questions the government’s willingness to resolve mining concerns via the new Mines and Minerals Act.
Areas of concern
The ban is a good step in the right direction and a welcome move, but its timing and intentions are questionable. In May 2022, the Minister of State for Presidential Affairs and Monitoring Implementation of Government Programmes, Dr Joram Gumbo, visited and confirmed the completion of the first phase construction project for Mutoko granite cutting and polishing plant.
Richbasin Minerals, a Chinese-owned company, is building the plant and plans to invest US$5 million in that plant in Mutoko. So, the ban came only a few months after the facility was put into service.
Is this ban intended to address citizens’ concerns or to protect and reassure this Chinese-owned corporation that there will be work for the newly commissioned plant?
At the same time, blocking its competitors from exporting unpolished granite and profiting outside of Zimbabwe. In that case, who is more important, investors or the villagers in the granite mining communities? If the ban stands for the investors, who will stand with the community?
The ban seems to be investor-centred and selective. It exempts mining companies authorised by the minister in writing and pre-existing valid contracts to export unprocessed granite until the date of expiry.
These exemptions, if not well monitored, will reverse all the intended benefits. Exemptions create opportunities for abuse and corruption.
Contracts may be doctored and exploited by misrepresenting contractual periods.
Those without contracts can use pre-existing contracts or can be subcontractors, obviously for a fee. For those authorised by the minister, they will depend on his honesty and integrity. Otherwise, this avenue may be abused to benefit politically connected people.
The positive side of the ban
The prohibition of the export of unpolished granite is consistent with the African Mining Vision (AMV), the Sadc Mining Protocol, and National Development Strategy One (NDS1).
To achieve the AMV, governments are required to promote local beneficiation and value addition of minerals. Furthermore, value addition and beneficiation are among NDS1’s strategies to encourage mining sector growth to reach the US$12 billion mining economy by 2023.
However, granite was not part of the five key minerals (gold, PGMs, diamonds, coal, and chrome) of the NDS1’s beneficiation and value addition strategy.
According to the president, polished blocks are sold for US$12,9 million each, whereas unpolished blocks fetch US$4,5 million. Granite accounts for approximately 1,6% of Zimbabwe’s overall exports.
The ban will benefit different stakeholders like the government, residents in mining communities, mining companies, and general citizens, among others.
These benefits comprise of promotion of value addition and beneficiation; increases in export earnings; creation of direct and ancillary jobs; locals are trained to cut and polish granite using modern technology.
They also include increase in employment related taxes and consumption taxes; assurance of work to investors, who invested in processing plants forcing others to follow suit; improves the contribution of granite to: economic growth, GDP and the US$12 billion mining economy by next year 2023.
Furthermore, it will reduce labour and transport costs for the mining companies, but it may be a big blow to transporters.
The ban does not address environmental and land degradation challenges caused by granite mining. Considering concerns in mining communities, the ban seems to partly address the economic issues while neglecting other social, traditional, and environmental concerns.
Some environmental and human rights advocates blame the government for turning a blind eye to citizens’ concerns while attentively listening to investors.
Granite mining communities are negatively affected by deforestation, noise, water, farmland, and air pollution.
Blasts are damaging and causing cracks in their homes; heavy machinery noises; damaged roads and bridges; evictions to pave way for granite mining; insufficient compensation; and losing their ancestral fertile lands.
Moreover, some mining companies prioritise profits above people and the environment and are accused of providing poor working conditions.
Some residents are scared to challenge investors, believing that they have lost the right to reject these companies from entering their community.
Furthermore, some mining companies leave behind debris everywhere and open pits uncovered, endangering children, domestic animals, and wildlife.
Additionally, the ban may not work due to informality and illicit trade in this sector. There is weak monitoring, evaluation, and assessment of the quality of products.
There are limited/no weighbridges to confirm the weight of granite leaving communities.
The ban will lead to a reduction in trade taxes like the 5% export tax that was meant to discourage the exportation of unprocessed granite.
From a business point of view, this came abruptly with no time to set-up processing plants except for companies that qualify for exemptions.
The way forward
The pre-existing contracts and the minister’s exemption criteria must be made public or at least made available to Members of Parliament for scrutiny, monitoring, and evaluation to avoid corruption and abuse.
Those with pre-existing contracts should not subcontract, and there must be a strategy to monitor that. In addition, there is a need to reduce red tape on the allocation of space and licences to allow the quick set up of more processing plants.
The ban must be supported by a strategy to deal with illicit trade and informality. There is a need to remain competitive and enforce quality control in order to make quality products that fetch better prices in international markets.
The local content policy must be respected to promote employment of local skilled/unskilled workers and the use of local resources. There is a need to construct weighbridges in mining communities and increase development levies.
Furthermore, there is a need to support local firms since they are going to face stiff competition from foreign owned companies. There is also a need for political will to enforce environmental legislation that addresses land and environmental degradation.
Finally, investors should be socially responsible, engage the community to gain social licence and do environmental impact assessment before they begin their operations.
- Nyamudzanga is an economist. — firstname.lastname@example.org.These weekly New Perspectives articles published in the Zimbabwe Independent are coordinated by Lovemore Kadenge, an independent consultant, past president of the Zimbabwe Economics Society and past president of the Chartered Governance & Accountancy Institute in Zimbabwe (CGI Zimbabwe). — email@example.com or mobile: +263 772 382 852.