Value addition and beneficiation of minerals ended as a dead rubber in 2021 as raw minerals continued to define the country’s exports. Raw minerals led the exports for December 2021 according to the latest data released by ZIMSTAT earlier this week, not ruling out its dominance since January 2021 as well.
Semi- manufactured gold claimed the first spot accounting for 42% of exports followed by nickel mattes including platinum at 18.3%, nickel ores and concentrates at 13.4% respectively.
The Zimbabwean government recognised the potential of the mining sector to transform the economy and on the 23rd of October 2019, unveiled a policy document outlining how the country plans on turning the mining sector into a US$12 billion industry by next year.
The projected increase to US$12 billion in mining earnings represented a 344% jump from US$2,7 billion achieved in 2017.
Zimbabwean mining sector has remained resilient despite the turbulent waves in the local economy which are characterised by liquidity challenges, economic uncertainty, policy inconsistency, rising inflation and lack of investment.
The sector contributes about 16% of GDP to Zimbabwe's economy and more than 60% in foreign-exchange earnings making it the leading foreign currency earner.
During the period January to October 2021, platinum contributed US$703 million, gold US$147,9 million, ferrochrome US$105 million, diamonds US$45 million and coke US$23,6 million, after retention threshold deductions.
However, the worrisome part is that value is not yet added.
Value addition not yet founded
The mining industry is not only targeting to achieve a US$12 billion revenue by 2023 through just exporting minerals, but also by adding value and beneficiation. By this, it will even get more.
Beneficiation and value addition of minerals before exporting is one of the key pillars of accelerating economic development in Zimbabwe.
Through beneficiation, the country would cushion itself from vulnerabilities associated with any decline in world commodity prices that can affect the current major export earners such as platinum, gold, nickel and chrome. The flag bearers in beneficiation have been the three platinum miners which are Unki Mine, Mimosa Mine and Zimplats.
Beneficiation does not only bring a US$12 billion industry but also brings massive benefits to the country such as employment creation for all enterprises in the mining value chain and growth in minerals export value which translates to increased tax returns. Secondary benefits such as an increase in domestic demand for goods and services and infrastructure development in mining towns can go without saying.
To achieve value addition, the government of Zimbabwe should be ready to adopt several changes such as suspending duty on processing equipment for current miners, tax holidays on mining royalties and value-added tax and suspending renewal licences.
Reducing licence fees and increasing foreign currency export proceeds to 100% from 60% for all miners will enable them to commit to investing in beneficiation.
Investing in beneficiation requires more foreign currency and with the sector retaining only 60% which is not enough to carry on their daily duties, value addition will be a nightmare.
The Mines and Minerals Bill should be rushed into an Act to address transparency and accountability risks and vulnerabilities associated with the archaic Mines and Minerals Act of 1961. The proposed Mines and Minerals Bill should be grounded on transparency and accountability along the mineral value chain and should reflect the tenets of the African Mining Vision of having a “Transparent, equitable and optimal exploitation of mineral resources to underpin broad-based sustainable growth and socio-economic development.”
A shift in the biggest trading partner?
Exports to the United Arab Emirates exceeded those to South Africa. Dubai accounted for 42.2% of exports, up from 22.4% in November with exports to South Africa tallying 38.1% in December from 33.4% in November. However, South Africa remains Zimbabwe’s biggest trading partner.
However, a key point to note is that this is most likely reflecting the emergence of Dubai as a major destination for Zimbabwean gold. In December, in total, Zimbabwe exported 4,417kg of gold valued at US$248.1 million, compared to 2,455kg valued at US$139.1 million in November. Dubai has become the biggest buyer of gold from Africa.
Lately in 2021, the Dubai Gold & Commodities Exchange (DGCX) and the Victoria Falls Stock Exchange signed a Memorandum of Understanding that may lead to the establishment of a gold market in Zimbabwe.