Editorial Comment: Govt must come up with policies that promote value addition

The Zimbabwe International Trade Fair Company is once again hosting its annual specialised Mining, Engineering and Transport Exhibition. The exhibition started yesterday and ends tomorrow. It provides an opportunity for players in the targeted industries to meet and discuss business opportunities in a conducive environment unlike the Zimbabwe International Trade Fair, which is a generalised exhibition.

Players in the mining, engineering and transport sectors have a better chance of clinching business deals at Mine Entra than at ZITF.

According to the organisers of the exhibition, more than 220 direct exhibitors have confirmed participation at this year’s event, with at least 13 foreign companies taking part.

Being conducted under the theme Extract Value, Boost Economic Growth, this year’s edition of Mine Entra should provide opportunities to our mining industry to find ways of adding value to the minerals they export.

Zimbabwe, despite being endowed with vast mineral resources, is not deriving maximum benefit from its mineral resources.

Most of the minerals are being exported in their raw form or when they are partially processed. This is an unfortunate situation which most African countries which are resource rich find themselves in.

The time has come for the country to set the pace for Africa like it did with the land reform programme and the indigenisation regulations to come up with policies that promote value addition of mineral resources before export.

By exporting raw minerals Zimbabwe is creating employment for other countries which would add value to its gold, diamonds, platinum and chrome ore.

India, for example, has no diamonds to talk about but is one of the largest processors of the gems. Thousands of jobs have been created in the Indian diamond market through cutting and polishing of mainly imported precious stones.

Zimbabwean platinum is creating jobs in South Africa as it is being processed in that country.
Our jewellery industry is not benefiting from the gold that is being dug here.

The danger of relying on exports on raw minerals becomes clear when world commodity prices start to fall.

Those mining gold for example might be forced to embark on cost cutting measures because their earnings have been affected by a drop in the gold price since the beginning of the year.

The falling mineral prices also mean remissions to the Exchequer will also be low, affecting government revenue.

However, if the country was exporting processed minerals, it could to some extent shield itself from the vagaries of price fluctuations by determining the price of the finished product.

As it is, the country is a price taker. Those buying the country’s minerals have a “take it or leave it” mentality because they know there are many sources of these minerals.

It is against this background that organisations taking part at Mine Entra must seriously consider value addition.

The government took a step in the right direction when last year it directed platinum miners to set up a refinery in the next two years after which it would stop processing export permits for unprocessed platinum.

The same directive should be extended to other players in the sector such as diamonds.
Mining companies must help set up diamond cutting and polishing centres in the country and help create jobs for the local economy.