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Golden Sibanda Senior Business Writer
MINING firms are preparing a set of proposed interventions by Government that among others things allow some form of fiscal and tax reprieve as well as unhindered operation of most mining entities and essential service suppliers to the sector.
This comes after some mines cut production or were put under care and maintenance while essential service suppliers were not allowed to operate freely as part of lockdown conditions following the global outbreak of the Covid-19 pandemic.
The disease, which is caused by coronavirus and was first detected in the Chinese city of Wuhan in December last year, has killed four people and infected 32 in Zimbabwe and Government is battling to stop its spread and wipe it out, including through a national lockdown.
In the interim, mines said focus will fall on efforts to make sure that there is minimal disruption of operations in the mining sector, one of the most critical and strategic sectors accounting for a huge chunk of Zimbabwe’s acutely limited annual foreign exchange earnings. Most sectors of the Zimbabwean economy and society at large remain under Covid-19 lockdown restrictions, extended to May 3, 2020 after the initial 21-day lockdown period that expired on April 19, was extended by a further two weeks.
As such, Chamber of Mines of Zimbabwe (CoMZ) chief executive Mr Isaac Kwesu, said they were preparing proposals to Government with key requests including fiscal and tax relief measures that boost liquidity to enable operators to return to full production.
The strategy document covers short to medium term interventions as well as post lockdown measures and plans well after the Covid-19 pandemic. This comes amid indications that the pandemic will certainly cause decline in targeted production.
Economies across the world expect negative growth to depths last seen during and soon after World War Two, including world’s second largest economy, China, which had registered exponential growth for over four decades. For the first time in decades China is expecting a 6,5 negative economic growth.
Among most other sectors affected by national lockdowns due to Covid-19 worldwide, which has cut and disrupted supply and value chains, is Zimbabwe’s mining industry. Estimates show that Zimbabwe’s mines may have lost 60 percent of anticipated output following the decree by President Mnanngagwa for a national lockdown in the face of the hazards posed by Covid-19, a viral disease that has killed over 200 000 and infected more than 3 million globally.
“In the medium term, the majority may find it tough to expand production, even those who may have temporarily shutdown their operations need capital, so there should be some form of support or reprieve in terms of fiscal and tax issues to ensure they come back into production.
“Those mines in production, but operating below capacity need to unlock cashflows and so need (fiscal or tax) support measures,” Kwesu said in an interview.
He also said they were also working with Government to ensure that distribution of minerals to the markets was uninterrupted, since after producing the mines needed to sell to generate working capital.
“Specifically, (Reserve Bank of Zimbabwe unit) Fidelity Printers and Refiners must be able to receive deliveries and sell gold; that is almost immediate because (mines) need working capital,” Kwesu said.
Mining firms, through their association, also want Government to allow all essential service suppliers and contractors to almost immediately be allowed to resume uninterrupted operations provided sufficient prevention measures are in place.
“We are engaging Government, through the Ministry of Industry and Commerce to ensure that all essential service suppliers to mining will continue to operate uninterrupted because when you produce you need inputs, you need contractors; you cannot work own your own,” he said.
With mining generating over 60 percent of Zimbabwe’s export earnings, it is estimated that the sector accounts for between 12 percent and 16 percent of the gross domestic product (GDP). Government wants mining to anchor economic growth and transformation towards its Vision 2030 of making Zimbabwe an upper middle income country.
Key minerals in Zimbabwe are gold and platinum, which account for more than half the earnings from the mining sector, but chrome, nickel, coal, diamonds and copper maker smaller but important contributions.
Bongani Ndlovu