Online Reporter
THE right to prospect for a particular mineral in a specified area, or extract it when it is discovered, is not an eternal right designed to benefit speculators, but rather a temporary right designed to give a genuine miner high-level security for their investment, while they are actively working their claims.
Zimbabwean mining law, dating right back to the days of the British South Africa Company in early colonial times, is built around the policy of use it or lose it.
Active miners get a great deal of security and are able to establish exclusive mining claims and then dig these without anyone else able to step in and grab them.
But, the critical point is that only active miners get this security for the life of their mine.
But if they do not exploit what they have discovered in an exclusive prospecting order, or if they do not actively mine where they hold the licence, then these lapse after a few years.
The holder is given a reasonable time to put together whatever investment might be needed, but if they cannot do that, or if they simply do not care, then someone else is given the same chance.
The mineral rights of Zimbabwe are owned by the State, having been bought from the British South Africa Company in 1933, that company having acquired them in law through some dubious treaties and by conquest.
But since the first land titles were issued, landowners have never owned or even controlled the minerals under that land. This is why the owner of the minerals, the State, can set the rules over how they are to be mined.
The policy of use it or lose it, is an automatic correction for speculation. People and companies have tried to acquire mining licences purely for resale later without any serious intention to mine the stated ore, but this is a very short-term investment.
The speculators can be separated from the quite-proper exploration companies, that specialise in geological exploration and back this with the initial exploration shafts and chemical analyses, before seeking a mining company that wants to buy that initial work for the commercial mining.
That is a genuine specialist business that serves a serious purpose, and does not involve speculation.
Speculators can, however, be a nuisance. Speculation was very bad in the earliest colonial times, with multiple gold mining claims handed out as partial payment to the invading forces and then traded quite dramatically on temporary exchanges in Harare and Bulawayo.
But these claims almost all lapsed within a few years, leaving just those where someone was mining gold. Subsequent speculation has been similarly cancelled out by the lapsing of licences.
What Cabinet has now decided is to enforce the laws that already exist, and have existed in similar form for many decades. All mining licences are issued on the clear understanding that they are a temporary licence conditional on actual mining, so no one can claim that a property right is being taken away if a non-user loses a licence.
The other critical policy being reinforced by Government through the Cabinet decisions this week is the need for locally mined minerals to be processed before export.
This is to both boost the value of the exports, so earning more money for Zimbabwe from a non-renewing asset, and secondly to expand the range of employment and value creation within Zimbabwe.
This sometimes requires some detailed policy over and above the general intent.
In chrome mining, no new licences will be issued for a mining claim of more than 100ha, which is a very small claim, unless the miner granted the licence is putting in extra chrome furnace capacity.
This stops the excuse of lack of furnace capacity that a company might try to use to export chrome ore rather than ferrochrome ingots. They now have to line up the furnace capacity before they dig.
The policy still allows small-scale miners to operate, but these have always had to sell ore to middlemen and those middlemen are now obliged to process the ore into ferrochrome before export.
There are already companies that do this.
On lithium, the new big mineral, the Government has been steadily in consultation with the leading mining companies building up the requirements for local processing.
It might have been just ore at first, and then concentrated ores, that is with as much waste as possible cut from the mineral ores dug out of the mine.
Now, in 18 months-time even concentrates must be converted to at least lithium sulphide before export, although other lithium salts required by battery manufacturers and other users are equally permitted.
This involves chemical processing, rather than just the mechanical processing for concentrates. But the major producers are building the facilities so the deadline will be met.
Since lithium is an exceptionally reactive metal, that bursts into flame on contact with water or even in humid conditions, only a trivial amount of the global production is ever converted into metal, and then only for chemical teaching and special needs.
Almost all lithium eventually ends up as a salt of the metal with the major manufacturers needing lithium, the battery and glass makers mostly, specifying which salt they prefer to minimise further processing stages.
The Government has been careful in implementing its policy of local processing and value addition, giving the mining companies plenty of notice and working with them, or at least the leaders in the fields, to set realistic deadlines.
A respectable company will usually just want a level playing field, without the deadbeats in the industry able to profit from shortcuts.
Many quality mining companies have little problem with local processing, so long as volumes are high enough for each process, since this has to be done somewhere and Zimbabwe should be as cheap as anywhere else, especially as energy needs are sorted out.
Local processing also cuts transport costs, which can be a important when you are exporting from a landlocked country at the bottom of a continent. You want your products so far as possible to be lower in bulk and higher in value.
Mining output is already our most important export earner, although agriculture involves a far higher percentage of the active working population.
The objective is to make sure we earn as much as possible from that mineral wealth and even when we have a large heavy industrial base using far more of our minerals, we will still be a mineral exporter so need to export minerals in the form that other industrialists want at their factory gates.
