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President of the Confederation of Zimbabwe Miners Mr Rangana Chauke said in an interview last week that mining is a low-hanging fruit, which had a quick turnaround time yet it remains largely unfunded and underfunded.
He further noted that support for small-scale miners was a sure way of ensuring empowerment as most of the mining entrepreneurs are facing serious financial constraints.
Because local small-scale miners and claim holders cannot access resources to finance operations, foreign companies are taking advantage to muscle their way into the sector.
“Government needs to really focus on the mining sector because it is the key sector where indigenisation and empowernment can be truly achieved. However, it seems that much attention has been focussed on big conglomerates at the expense of small-scale miners, especially gold miners, who traditionally have been the largest contributors to gold production.
“Some of the miners need capital of as little as US$1 000 to restart their operations. This cannot be compared to corporate companies that need huge investments.
“Much of the equipment that is needed includes compressors, water pumps, tractors and stamp mills. In the past we have heard about some of the initiatives that have been made to mechanise miners, but nothing has come out of it,” said Mr Chauke.
Prices quoted on some of the critical equipment on the local market is considered to be punitive, with compressors valued at an estimated US$10 000, while trucks are pegged at US$30 000.
Presently, it is proving to be difficult for miners to access funding from banks owing to stringent risk control measures and low liquidity conditions on the local financial markets.
Recent statistics from the Ministry of Finance indicate that “transitory” or short-term deposits constitute 90 percent of the total deposits on the local market, a development that ultimately starves projects with long gestation periods such as mining.
Estimates from the CZM indicate that there could be as many as 20 000 small-scale miners dotted across the length and breath of the country.
According to Mr Chauke, the cash squeeze experienced by the miners was prompting most of them to offload their mining claims, usually to foreigners.
Soaring commodity prices have spawned bargain hunting for claims and minerals by foreigners as demand from China and India, the fastest-growing economies in the world, continues to grow.
Gold, in particular, is being sold between US$42 and US$45 per gram on the local market.
“The situation on the ground is really desperate because some of the small-scale miners are being stretched to the limit, and, unfortunately, they have had to sell their claims to foreigners.
“At the moment foreigners are gaining a foothold on our resources,” added Mr Chauke.
CZM opines that there is need for small-scale mining organisations to be included in the various committees and boards of organs that are tasked with crafting policies and making decisions that impact on both indigenisation and empowerment.
There is a feeling among many that the Government is putting much emphasis on indigenising foreign mining houses without investing the same energy to empowering small-scale miners.
Government used to have a facility, the Mining Fund, which was tailored to provide financial assistance, but reduced revenue inflows have diminished the capacity to fund it.
The Zimbabwe Chamber of Mines recently revealed that mining requires between US$3 billion to US$5 billion in recapitalisation in order for it to realise its full potential in the next three to five years, with the gold sector accounting for US$1 billion of the sum.
Last year, gold production rose to more than 8 tonnes and is forecast to rise to 13 tonnes on the back of firming international prices.
Economic experts believe that the slow recovery currently being experienced in the developed markets such as the United States of America and Japan will continue to channel investor resources into commodities, especially gold, in order to hedge against the vagaries of the market.
Historically small-scale gold miners have been the largest contributors to production, but the trend was reversed during the decade-long economic recession preceding the formation of the inclusive Government in February 2009.
Mining sector representatives estimate that the country’s small-scale gold miners could number between 15 000 to 20 000.-The Sunday Mail
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