Zimbabwe News and Internet Radio

Part 2: Chrome Mining could be a saviour if only we stop looting!

By Julias Muguwe

I do believe we all had a good Christmas. As promised I will further explain why I believe Mining can bring this economy on track. I have tried to avoid using Geological jargon, as only the likes of Dr Chris Mutsvangwa will comprehend this. I hope he will find this not a vapid article.

Julias Muguwe is the MDC UK and IRELAND Portfolio Secretary For Mines And Energy
Julias Muguwe is the MDC UK and IRELAND Portfolio Secretary For Mines And Energy

Firstly lets understand some basic Geology facts about the Zimbabwe Great Dyke so that we are all on the same page. The Great Dyke is a linear geological feature trending sub vertically across Zimbabwe.

Basically there are for chambers on the great dyke namely Musengezi Complex, Hartley Complex, Shurugwi Complex and Wedza Complex. These are just the main mineralised zones. They are simply the centres where magma was intruded from the ground.

When settled the magma formed layers composed of different mineralisation, ie Platinum (PGMs) and Chromite. See schematic diagram below also showing the distributions of mines and chrome tonnages along the great dyke.

Facts About The Great Dyke

• It’s highly mineralised with Chromite and Platinum (PGMs). Gold, Copper, Nickel, Silver, tin, asbestos and cobalt occur in association.

• Zimbabwe has the 2nd largest Platinum/Chromite deposit in the World after South Africa. A similar structure in South Africa is called the Bushveld Igneous Complex

• Chromite is mined throughout the Dyke, especially in the Darwendale, Lalapanzi and Mutorashanga areas.

• The three largest chrome mining companies are on the dyke are Maranatha Ferrochrome, Zimalloys and Zimasco.

• Platinum group metals are currently mined at Ngezi Mine south of Selous by Zimplats of the Impala Platinum Group, at Unki Mine near Shurugwi by Anglo American and at Mimosa Mine near Zvishavane by Zimasco for Impala Platinum. The Hartley Platinum Mine near Makwiro is not currently operating.

• Most of the chrome mining activities take place through tributaries. A tributary arrangement is a form of subcontracting or leasing of mining ground on a temporary basis to a third party to exploit minerals in return for paying an economic rent to the lessor-that is the owner of the mineral rights.

• Tributary owners mining in the Zim Alloys and Zimasco claims can only sell to them at their own prices. Zim alloys and Zimasco have smelter that’s why but not fully operational at the moment.

• The tributary miners are getting prices per ton ranging from US$55 to US$80 against an expectation of US$120 which made operations sustainable. There was very little room for negotiations.

• 70% of Chromite claims are owned by Zim Alloys and Zimasco and these are the high-grade ores. Towards elections in February 2017 Minister Chidhakwa embarked on a move to expropriate some of Zim Alloys land to Zanu Pf youth. I do not know if this was affected.

• 30 % are owned by individuals and Seven Chinese Companies brought in by a top Government official. It’s only the Chinese companies who export chrome and the rest of the small-scale miners sell to Chinese companies at prices determined by the Chinese.

• Out of the 7 Chinese companies only one is on record to have obtained papers through the MMCZ the rest is through a political heavy weight and fraudulently. This is why in the Midlands the Chinese disobey every mining law because they are untouchable.

• China is the biggest purchaser of Zimbabwean Chromite. This is another reason why our government gets goose pimples when you talk about China. They claim they are our Best Friends. I don’t know how much they pay our treasury or the individual who protects them or who mortgaged these claims to them. I also don’t know him.

• Currently, the sector employs less than 2 000 people and it is has the potential to employ over 7 000 people in a conducive environment.

The Economic Crisis

We can all start asking questions why are we are in a mess given this large chromite resource. If you re-read the above facts you will have all the answers. I have in my past write up said the Mining industry is run by nonentities and with regards to Chromite I will once again explain.

How do we live with the fact that we are no 2 in the world in terms of Chrome deposit but we are not even in the top five in terms of producing Chromite. Surely something is amiss. Of the seven Chinese miners only one has confidently admitted that it had acquired the claims through the proper channels. MMCZ once did an audit in 2013 and also confirmed that in one of its audits that there were some locals who were being used as fronts (corruption) by Chinese to acquire claims.

It is also observed that there are several challenges affecting production of chrome which include; lack of investment for recapitalization, use of obsolete equipment leading to high production costs as well as high tariff and shortages of electricity.

Other issues that this Mines ministry is sitting on is the fact that the government is taking long to put in place a modern mining title system which would address claim ownership identities and wrangles. The question that arises in everyones head is: How much does Chrome mining contribute to the fiscus.? This information is not in my know how but what I know is between 2009 and 2011 the country exported chrome worth US$53 million dollars.

At that time and possibly now chrome attracts a royalty of 2% and the chrome sector is charged a royalty of 20%. This means the treasury received about US11 million. How laughable is this? While producers had made substantial profits, the country lost a lot of revenue through the export of chrome ore because of the lack of value addition.

This is where these ignomarases heading the mining industries lost some brain cells. If this ministry knows what its doing it should use the levies to built smelters so that even the chrome fines and be smelted. Only lumpy ore is exported.

This adds value to the product and creates jobs. At one time in the past the government once allowed small scale miners to export chrome. There was a chrome mining Boom! However due to the huge profit margins made from exports when compared with selling to the local smelter, the chrome miming on the Great Dyke was done without following proper mining procedures leading to sterilization of mining ground and serious environmental degradation.

A lot of the small-scale miners sell their coal to the Chinese who are allowed to export. Don’t you think the government is losing money on this whilst the Chinese and their protectors are benefitting big time? Your guess is as good as mine. A lot of Zimbabweans are brainwashed by being given these lowgrade claims and forced to sell to the Chinese who are just being used as fronts.

The Chinese created the impression within the community and in some government institutions that someone in a very ‘high’ office in government protected them. By the way when will ZACC start work on the Great Dyke?

Following the ban on selling chrome internationally small-scale producers were left with no option but to sell to the local smelters who offer an average price of US$60 compared to an average international price of between US$110 and US$235 per tonne.

In the process, this created a standoff between the small-scale producers and the local smelters. There are so many Chrome miners who are stuck with Chromite they don’t know what to do with.

This is because local smelters only accept an ore grade of 40% and above and yet most small-scale producers own chrome claims with a lower grade content which is not accepted by the smelters but has a market outside the country particularly in Asia.

The Solution –Stop Monopoly

Productivity in the chrome sector is on a serious decline and yet the sector has a huge, rich and largely untapped mineral resource, which has not been of much benefit to the country because the people heading mining don’t know what they are doing.

Therefore it is imperative for government and the key players in the sector to actively work together to create a conducive environment that will lure investment, which would spur the growth of the independent small-scale producers, large-scale producers and smelters.

In the same vein, value addition of chrome is critical for the country because it will create more jobs and generate more revenue for treasury. It is also imperative for government to amend the Mines and Minerals Act, which would create a platform for the sector to address issues of monopoly over\ chrome claims and for the resolution of disputes between farmers and miners through a restructured Mining Affairs Board, which can effectively address contemporary issues.

Last but not least it is important that the mining communities are also empowered so that they derive long-term benefits from minerals mined in their vicinity. One most important and critical thing that the Ministry of Mines need to do as of yesterday is to make sure Mining companies like Zim Alloys and Zimasco are forced to release ground and the Ministry of Mines can use current legislation and/or if its inadequate, a Statutory Instrument (SI) can be crafted to handle the same.

The Ministry of Mines should speedily bring to Parliament the amendments to the Mines and Minerals Act so as to promote growth, transparency and accountability in the mining sector the same manner they have brought in those repressive laws.

The problem lies with the current Mines and Minerals Act that allows for base metal/ mineral claims to be inspected by payment in perpetuity as opposed to Precious metals that cannot be continually inspected by payment but by declaration of work.

So these mining houses have held on to the rich chromite claims for so many years whilst the people are suffering as long as they pass inspections. In Zimbabwe its easy ,one just bribes the inspectors. The Government should create a conducive environment that lures investment into the sector by ensuring that there are no policy inconsistencies governing the mining sector.

This is not happening because some people are benefitting from the Chinese monopoly. The local communities are not even benefitting from these shareholding structures. The shareholding structure of Sino-Zim, the largest shareholder of chrome claims in the country should be addressed so that locals especially the mining communities benefit.

At the same time the shareholding structure of the company, which I hear is 73% in favour of the Chinese ownership should be re-aligned according to the indigenous laws, so that local people can actively participate and benefit from the sector. This is the only arrangement that was done before the new dispensation, which was not in line with the Mugabe’s 49%-51% indigenization policy.

So who owns the Chinese company?????? It is also of concern that Chinese operations – Chinese companies should be legalized and respect the labour practices, and cultural values of the country. They should also adhere to their (SCR) social corporate responsibilities and desist from behaving as untouchables. They do have the same behaviour in the gold claims they are exploiting.

I have witnessed this in Makaha North East of Mutoko. We will talk about Gold in due course. What you need to note now is gold occurs in the greenstone belts in Zimbabwe. In Kadoma and Kweke we have greenstone belts being mined by artisanal miners. (Small scale).

These do pay a fee to the claim owners some in the form of gold. This is where find avanoti MaShurugwe or Makorokoza vanetsa. They are above the law. A story for another day! In whose gold claims are they mining? A quick solution to this mess will be for the Government to nationalise the great dyke chrome, built smelters so that even the fines are treated locally before exporting.

Chrome mining on the Great Dyke is limited to ground excavation using excavators and surely any regime can afford this. We do have the experts in the country. In addition a proper EMA legislation put in place to avoid environmental degradation.

Once again the economy can be put back on track if we have the right people and doing the right things. The lives of Zimbabweans can be improved. It is highly unlikely that the mining comatose can be resolved by this regime because they are the ones who brought about this mess. Cry my beloved country. Watch the space for the Gold and Diamonds debacle.

Same people exercising Thievocracy!

Once again I write in my capacity as a Competent Registered Geoscientist with SAIMM-(South African Institute Of Mining and Metallurgy), A fellow of the Geological Society of England (GEOSOL) and a competent person with SACNASP ( South African Council for Natural Scientific Professions).

Julias Muguwe is the MDC UK and IRELAND Portfolio Secretary For Mines And Energy