High power tariffs major challenge to mining industry Minister Patrick Chinamasa
Minister Patrick Chinamasa

Minister Patrick Chinamasa

Leonard Ncube in Victoria Falls
HIGH electricity tariffs and lack of formal exploration rights were yesterday identified as key challenges facing the mining industry.

While the sector predicts a boom in the outlook year, participants at the 78th Chamber of Mines of Zimbabwe annual general meeting and conference here called for a proper model that should reduce tariffs to as low as about $0.03 cents/kwh.

The power utility, which is struggling to recover up to $1 billion owed to it by consumers, charges around $9,86/kwh and has been seeking an upward review to $14.69/kwh.

The power utility has up to the end of the month to clear electricity import arrears of $43 million to South Africa’s Eskom, where it imports its power and has engaged Treasury to help mobilise resources.

Miners said power was key to mining activities which can unlock other sectors.

Said Chamber of Mines outgoing president Mr Toindepi Muganyi: “The mining industry  smelting consumes between 7 percent and 60 percent power and this is huge and phenomenal consumption if we have wrong tariffs. At BMC, the cost of power for the smelter is in excess of 40 percent of energy consumption hence it’s important that the correct power tariff and volume of power coming into the country is favourable.

“If power tariffs are favourable, people will come in and establish smelters and even agriculture will grow. The issue of power is critical to mining and we should seriously look into it to maximise mining linkages especially local content as these will unlock other sectors.”

Mr Muganyi called for a quick review of the fiscal framework, while also imploring government to put in place formal exploration policies.

“There is a need for a review of the fiscal framework. The industry has a low level of formal mineral exploration which is at the moment done by artisanal miners. We need a formal exploration activity if we are to develop,” he said.

Participants said the country was losing a lot of money importing electricity when it should capacitate local industry to produce through incentives.

Mines and Mining Development Walter Chidakwa, who is also the in-coming Chamber of Mines honorary vice president, rapped Zesa for charging high tariffs saying the parastatal’s role was to create a conducive environment for other sectors to make profits than for it to benefit.

“We need a model for power. Yes, we are in a difficult situation but we need value addition which begins with smelters.

“We can’t have this without the right power that is competitively priced. Miners rely a lot on power hence we need to act and can you seriously discuss this model and probably revolving around $0.03 cents you are proposing,” he said.

The Minister said countries should learn from China which has taken over “the African affair on power supply” because tariffs charged by the Asian country are very low.

“It is wrong for Zesa and even National Railways of Zimbabwe to make profit. Their role is to create conditions for others to make profit”.

Minister Chidhakwa said he would engage relevant authorities to speed up the process of crafting the Mines and Minerals Act which had taken too long especially at the stage of consultation as well as the Exploration Bill which seeks to deal exploration and marketing aspects.

He said government had come up with finance regimes to capacitate small scale miners and manufacturers with $10,6 million already disbursed to Bulawayo-based companies who should produce mining equipment.

Finance and Economic Development Minister Patrick Chinamasa challenged mining companies to invest in energy generation.

The Governor of the Reserve Bank of Zimbabwe, Dr John Mangudya, in a speech read by his deputy Dr Kupukile Mlambo, said mining was one of the key drivers of the economy alongside agriculture and services.

He commended the mining sector for its positive response to the Government’s five percent export incentive which he said had contributed to a positive performance by the mining industry.

 

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