Bailout for closed & ailing mines

22 Jul, 2019 - 00:07 0 Views
Bailout for closed & ailing mines Delegates follow proceedings at the Mine Entra Conference at ZITF in Bulawayo last week

The Chronicle

Pamela Shumba, Senior Business Reporter

GOVERNMENT has pledged to facilitate the resuscitation of closed and distressed mines in the country as part of broader efforts to create employment and improve fiscal revenues.

Speaking at the Mine Entra indaba in Bulawayo last Thursday, a senior director in the Ministry of Finance and Economic Development, Mr Charles Mujajati, said a joint-venture linked model was being worked on to ensure such entities were back on their feet.

“The country stands to benefit a lot in terms of employment, incomes and fiscal revenues by resuscitating a number of closed and distressed mines located in various parts of the country. The TSP is set to resuscitate the closed mines under ZMDC through joint ventures and other initiatives,” he said.

“Government is committed to offer full support for the resuscitation of such mining companies including awarding them National Project Status where necessary as well as fiscal incentives, which will allow duty free importation of equipment thereby facilitating the resumption of operations.”

Mr Mujajati said most of the concerned mines were affected during the decade long crisis of 2000 to 2008 and the global financial crisis, which dampened global demand and in some instances, prices. Government, he said, was also seized with the amendment of the Mines and Minerals Act, which continues to obstruct new exploration and investment in the sector as well as delay the release of mining claims being held for speculative purposes.

Mr Mujajati added that Government, through the Ministry of Mines and Mining Development, was committed to concluding the amendments of the Act, which is long overdue. 

He said the mining sector was a huge pillar for economic growth given its potential to generate substantial benefits and revenues to the country if leakages were minimised.

“The mining sector is the biggest contributor to export earnings. The contribution of the mining sector to total exports increased from averages of about 48 percent from 2009 to 2013 and increased to about 53 percent from 2014 to 2018,” Mr Mujajati said.

“The major exports were dominated by gold, diamonds, PGMs and other minerals like nickel. This sector has potential to contribute much more if leakages are minimised.”

He said Zimbabwe was ranked 155 among 190 economies on the 2018 doing business index by the World Bank, while formal employment stands at about 843 000 of which mining sector employees increased from about 39 500 to                                                                                           45 000 following increased investments by mining houses from 2009 to 2018.

“Over and above the formal employment, the sector supports a big number of small-scale miners involved in gold and chrome mining.

“Globally, Zimbabwe is renowned as a resource rich country with huge reserves of platinum, gold, diamond and other metals. The mineral resource has attracted a substantial flow of capital into the mining sector for economic and social benefits to all Zimbabweans,” said Mr Mujajati.

He said it was important to note that low revenue performance negatively affects Government’s ability to invest in infrastructure projects as well provision of social services. 

“Revenue contributions from the mining sector, however, remain depressed. The sector’s highest contribution to the fiscus was recorded in 2014 where it contributed nine percent to total Government revenue but has declined to about 2,5 percent in 2015 and 2016 and improved in 2017 to about five percent before declining in 2018 to less than one percent,” Mr Mujajati said.

“This is attributed to the high prices of major mineral exports such as gold and platinum that was recorded in 2014. Furthermore, diamond mining was fully operational in Chiadzwa. Given the immense endowment of resources in the mining sector, there is potential for generating substantial benefits and revenues for the economy.” — @pamelashumba1

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