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The government has shown a great deal of sensitivity and flexibility by deferring, for two years, the obligation for platinum miners to process the mineral locally. At the same time, the government has refused to discard the provision completely. This demonstrates that authorities, while they are committed to enforcing the policy on local beneficiation and value addition of platinum, are also sensitive to the practical challenges facing the miners in terms of building that local processing capacity.
Mines and Mining Development Minister Cde Walter Chidhakwa was quoted in the Chronicle yesterday indicating that the 15 percent platinum tax on the export of ore would not be imposed as originally scheduled but would now take effect in the next two years. This, he said, should give platinum miners space to complete work on refining facilities by that time.
“Cabinet accepted my report saying the miners should be given a reprieve provided they commit to expanding the smelter at Zimplats,” he said, adding that he was confident that the smelter will be ready in less than two years.
Zimbabwe is one of the richest countries on earth in terms of proven mineral endowments per capita.
The country has the world’s largest diamond reserves, second largest platinum reserves and over 40 exploitable minerals. With regards to platinum, the country has the second biggest confirmed reserves of the critical mineral to South Africa. Other important minerals include gold, coal, chrome, uranium and iron.
However, the country has not been benefiting much from most of the minerals particularly diamonds and platinum. While platinum has always been carted out of the country for processing in South Africa, locally mined diamonds are processed at Antwerp in Belgium, Dubai in the United Arab Emirates and Surat in India.
Studies have been carried out to determine the cumulative losses the economy incurs through its raw and semi-processed exports of minerals. We are pleased that the government understands this massive loss and has taken measures to prevent them from recurring.
It has a policy for local beneficiation of minerals — diamonds and platinum. Also, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation has as one of its pillars, one for local beneficiation and value addition, not only for minerals but also other resources the country has, including timber, cotton and so on.
“Beneficiation is crucial because Africa produces 65 percent of the world’s diamonds and yet it only profits from 15 percent of the $90 billion global diamond industry,” wrote respected academic Garikai Chengu. “If Zimbabwe was able to cut and polish its own diamonds before exporting them it would create an additional $8 billion in revenue and 200,000 jobs. As it stands, Zimbabwe is literally exporting jobs through the export of unprocessed diamonds. In fact, India reported that the import of Zimbabwe’s unprocessed diamonds has created 60,000 diamond cutting jobs in India.”
Chengu wrote this in relation to diamonds, but it is easily the same situation with platinum as well.
To that extent, the government in 2013 announced the 15 percent levy on unprocessed platinum that was to take effect in January to encourage local processing of the mineral. While miners said the levy would cut their margins, they did not reject it outright. They initiated measures to build refineries, engaging the government for more time simultaneously.
Unki Mines, a unit of Amplats said five months ago that it would take two years to build a new smelter to comply with the government’s directive. On the other hand Implats, which operates the largest platinum mine in the country, Zimplats, is refurbishing a base metals refinery, which is expected to be completed around June next year.
We see both as practical steps towards the agenda of local processing. And in suspending the tax, the government has shown it recognises them both. This is a win-win situation because there is real evidence that the miners are willing and are investing in local value addition but the investments cannot be completed until 2017. The government is indeed obliged to listen to miners’ concerns, hence the suspension.
However, at the same time, there is a compelling need for the country to build local capacity to process its resources for us to earn much more than we do when exporting raw materials, hence the government’s policy on local beneficiation and value addition. It is because of this commitment that the government’s order remains for miners to set up the processing facility, albeit to be effective in two years’ time.
We are confident that the miners will recognise the government’s understanding and sincerity and continue with their ongoing beneficiation investments. The time for carting off the country’s natural resources is over but any directives for domestic beneficiation must take everyone on board so as not to disrupt mining activities.
Bongani Ndlovu
Online Reporter