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Mining sector needs to get better organised



THE mining sector, currently the country’s single largest foreign currency earner, is seen as having a key role in turning around the fortunes of the crumbling economy, yet it is bedevilled by a multiplicity of problems. These include the runaway smuggling of minerals, inadequate regulation, corruption and deadly disasters which cry for urgent intervention measures. The NewsHawks reporter Moses Ngwere (MN) had a chat with the chairperson of the Parliamentary Portfolio Committee on Mines and Mining Development, Edmund Mkaratigwa (EM), to discuss issues affecting the industry. Below are the excerpts:

MN: What is the committee doing about rampant corruption in the mining sector, particularly gold and diamond?

EM: In this ending year, the committee took a number of steps to ensure corruption mainly in the gold sector as the diamond sector was to a larger extend impacted by the Covid-19 pandemic. The committee was inundated with complaints on applications submitted to the ministry of Mines for mining title over many years yet without success. Mostly, once an application is lodged, it is alleged, it was becoming an advantage to some ministry officials and peggers to go ahead and make their applications for the same identified site or those areas were taken advantage of, by having small-scale miners deployed to the proposed mine area, while applications lodged were being delayed. Further, there were reports of ministry officials working in cahoots with other elements in society, advising those against some disputants, to continue seeking court interdicts as a way of delaying operations on selected mining areas, so as to keep the mine inoperative while buying time and hoping the owner would get tired or get a window to fully exploit the minerals at the mine. For gold and diamond sectors, as a result, we invited the ministry of Mines and its subsidiaries to respond to the allegations and they were grilled by the committee thereat. The committee, and particularly myself as its chair, have managed to denounce the scourge and advocated for transparency and accountability in all mining operations in the country. This has been done through the press, in workshops, training sessions and in self-initiated articles mostly in the Mining Magazine, among others, though the hallmark of against these practices in our view is also the amendment of the Mines and Minerals Act that we are pushing for finalisation, with a lot of hurdles along the way.

MN: How is the committee tackling the issue of rampant smuggling of minerals, again mainly gold and diamonds?

EM: The committee has advocated for higher budget allocations to the sector and in many cases that has been achieved. We have also advocated and lobbied for the shift in the minerals payment regimes so that the minerals are sold in the country and the gold payment model in the country was therefore also adjusted this year although we are calling for an increase in US dollar retention value if we have to contain the massive smuggling in the sector. We have advocated for recruitment of more staff and more enforcement and monitoring of policy implementation by all arms of state in the sector, and the interviews were conducted this year; towards reducing mineral smuggling through increased manpower and manpower mobility. The committee has therefore always kept an eye on the operations of the sector in the country with zero tolerance to those caught on the wrong side of the laws of the land.

MN: There are also complaints about delays in the allocation of mining claims and issuance of licences. Have there been any engagements with the ministry of Mines to resolve this?

EM: There have been countless engagements with the committee and the ministry of Mines and indeed we set a dashboard to that effect but there are still many challenges there. The challenges are related to issues noted above in addition to mere backlogging so as to congest the system until people come to pay money into their pockets for facilitation. On the other hand, resources have been limited on the part of the ministry and we stood with them for more resources to be allocated, although Covid-19 derailed the plans and processes in the ministry and government thereof. As a result, we demand to see positive outcomes of the efforts in the sector. Further, we have advocated for the mining Cadastre System that has been on budget for over six years now, and it has been prioritised also in the 2021 budget.

MN: The Mines and Minerals Bill, which seeks to amend the Mines Act, is expected to address a number of anomalies in the mining sector, but it has been hanging in the balance for a very long time now. At what stage are we now in terms of its passage into law?

EM: Indeed, this Bill has been on the cards for too long now. The committee formed a steering committee to follow up on finalisation of the draft Bill with the President’s reservations and incorporation of other more contemporary legal provisions. That draft Bill is now available and we are supposed to have the all-stakeholders’ conference this side of the year on the 16th of December and that was later postponed. Thus, we anticipate to hold the conference during the beginning of this year. After addressing the sector’s concerns, which will be raised in the conference, the only issue left will be for the Bill to go through the committee system’s law-making process through citizen participation towards enhancement of policy acceptability at implementation stage.

MN: The most topical issue in recent weeks and months relates to the high frequency of deadly mining accidents. As a parliamentary committee, have you done your own investigations to find out why there has been such a spike and, if so, what are your recommendations?

EM: Yes, we have done so and established a number of challenges clogging productivity and efficiency in the sector. There are issues or river-bed mining associated with failure by the miners to maintain the mines; there are issues of the rainy season now upon us; there are issues of lack of technical expertise in the sector and there are matters around inheriting disused mines and lack of standards and enforcement capacities to monitor adherence to any mining regulations or mining and, in that regard, some miners are mining on underground mining supporting pillars which end up collapsing and, finally, the rise of the small-scale and artisanal miners without adequate facilities. Our recommendations have been around formalisation of the small-scale mines and overall capitalisation of the sector, of which the 2021 budget contained some allocated figures towards the Cadastre System as failure reduces certainty that will impact on capital inflows for the development of the industry.

MN: Government speaks the language of value addition and beneficiation of minerals, yet we still have platinum companies like Mimosa, chrome-mining firms and lithium-mining firms still exporting ore. What do you think is preventing the actualisation of this?

EM: The government is not only speaking but has taken the position of value adding and beneficiation as a way of building the economy and that is where the country’s development potential lay most. However, a lot is already happening towards investment for value addition and some companies are already building the facilities and some of the mining companies, especially in the platinum sector, have been investing towards that a lot. The main challenge has been capacity of the current mining sector to produce enough ore for processing since these are big machines. So, there was need to continue expanding the industry in order for the operations to be economically viable. Value addition locally makes it easier for accountability mechanisms to be put in place for reducing leakages of minerals for example through under-declaration of value.

MN: How far have the country gone in terms of ratifying the Extractive Industries Transparency Initiative (EITI) agreement?

EM: The challenge with EITI is that it is not part of international law but a standard that is proposed for the country to achieve transparency in the sector. The committee has advocated for its adoption since the minister of Finance previously showed the desire to have its provisions adopted in the country. The debate is however still going on.
What is more needful is to agree as a country on whether this should be adopted in toto or just as provisions in existing legislation and amendments.
The general idea is being embraced but the implementation mechanism that reduces a negative boomerang on the government’s development efforts in future, synonymous to self-inflicting harm, is what we are looking at.
The country is therefore warming up to the debate with explanatory support from the civil society that is unpacking the EITI as a tool for transparency in the sector and with different views currently being raised for and against it at various platforms. So, it is still at lobbying, advocacy, public awareness building and education stage.
Remember the policy space is not easy to secure and we have to force its way through once all parties on the committee are fully convinced of its pros and cons to the country’s investment and to the sector today and in the future.

MN: As a committee, you obviously have an oversight role to play with regards the government’s mining ventures like Hwange Colliery Company which is struggling. What have you done to ensure it is brought back to life?

EM: I trust you are fully aware that Hwange Colliery is currently not fully owned by the government of Zimbabwe. The government only have a percentage of the shares. The company, therefore, should be able to run itself and government can support when it needs the support since its role is strategic. The committee did not deliberately do much on Hwange Colliery recently because the matter was dealt with by the former chairperson, Honourable (Temba) Mliswa just before I came in and of course inconclusively and the committee decided to stop handling it and focus on areas which can produce quick results that can easily turn on the economic fortunes of the country. There are matters that were sticky in the area but we focused more on areas that will lead us to quick low-hanging fruits first.

MN: What is the current status of the state-run Zimbabwe Mining Development Corporation?

EM: ZMDC is still a government-owned company that is functional but it has been having challenges in marketing some of its assets which are diamonds. It is therefore operating but, so far, that was being done more broadly at a loss hence it needed to be transformed in order to make it viable. It is one area which to us should be a cash cow and we are pushing for continuous national engagement and re-engagement to ensure that new and old markets are opened and we competitively participate thereat in line with market demands than our current limitations.

MN: Your committee receives annual mining returns from companies. What do they reflect in terms of growth in the sector?

EM: Yes, but these monthly and quarterly financial returns are mainly administrative reports for finances used throughout the year by the ministry as well as its subsidiaries; mere income and expenditure accounts. These are not informative enough for forecasting and evaluating overall mining sector growth.
The different agencies’ annual financial reports are more informative for such decisions, in fact. Those audited financial reports are usually deposited with the ministry and are then shared with us through the ministry and by the Auditor-General’s Office.
At the moment the agencies have not been posting interesting results but with efforts now put in place this year, we are looking forward to a more productive and successful year in 2021 as the foundation has been laid to a greater extent this year.
The committee on Mines and Mining Development are awaiting to witness increased productivity, reduced corruption, increased efficiency, more accountable institutions and overall strengthened institutions in the coming year and beyond. That way, the sector can continue to bounce back better in the coming years and towards the US$12 billion mining target and Vision 2030.