US$10m boost for small-scale gold miners

Oliver Kazunga

TREASURY has allocated US$10 million to the Mining Industry Loan Fund for the establishment of gold service centres across the country and to support small-scale miners to boost gold production.

The funds were allocated from the Special Drawing Rights (SDRs) resources given to Zimbabwe as part of the global bailout by the International Monetary Fund to ease the impact of Covid-19.

Small-scale miners, who traditionally deliver about 60 percent of the gold to Zimbabwe’s exclusive buyer of the yellow metal, Fidelity Gold Refinery (FGR), last year produced 18,7 tonnes (t) of the 30,1t.

Data from FGR indicates that 13 784 kilogrammes (kg) were produced in the first six months of this year, with small-scale miners contributing 5 798kg, while large-scale miners accounted for 5 367kg.

The Government has set a target of 40t of the yellow metal this year, from the 30,1t delivered in 2023.

Despite accounting for the bulk of the gold deliveries to FGR, the small-scale miners are being constrained by lack of sophisticated mining equipment, which, when made available, can stimulate productivity.

Owing to the rudimentary mining equipment used, the small-scale miners fail to access deeply embedded seams underground or de-water shafts flooded during rainy seasons, forcing the miners to temporarily abandon operations.

As such, the Mining Industry Loan Fund will be used to support small-scale miners to procure sophisticated equipment and machinery such as jack hammers, compressors, de-watering machinery and slurry pumps.

Through the Zimbabwe Mining Development Corporation (ZMDC), the Government is setting up gold service centres across the country.

Half of the US$10 million from the SDRs facility was set aside to support the initiative.

A gold service centre is a one-stop shop that offers technical services to miners, access to a milling centre, access to capital and a ready market for gold from small-scale miners to the FGR.

The centres would have a positive impact on the economy through gold mobilisation, plugging of leaks, employment creation, improved mining and safety standards, and health and environmental issues, among other benefits.

In an interview, Permanent Secretary in the Ministry of Mines and Mining Development Mr Pfungwa Kunaka said: “Currently, we have what we call a Mining Industry Loan Fund. The fund is a credit scheme, where miners are assisted with acquisition of mining equipment on loan scheme basis.

“At the moment, we are trying to capacitate the fund and my ministry has received an injection from the Treasury, and out of the SDRs resources, about US$5 million was allocated to the fund.

“We are in the process of procuring the equipment to boost the capacity of the loan fund that is targeting to assist small-scale miners.

“The Mining Industry Loan Fund is now operating alongside the gold service centres, which we are setting up as well, and for that initiative, we set aside another US$5 million from that US$10 million SDRs facility we got from the Treasury.”

Under the fund, Mr Kunaka said, the Government was procuring the mining equipment that includes slurry pumps, which are used in the de watering of mining shafts; as well as ball mills for crushing and generators, from domestic and foreign suppliers.

“There is a huge demand for equipment but the procurement that we are doing is to try and ensure that we get the equipment at the lowest possible cost.

“If we just jump to get any supplier, we might have challenges with the equipment coming in at a very high cost, which defeats the purpose because miners are not going to afford to mechanise their operations through the loan fund.

“For example, if a miner comes and gets a generator today, they are expected to repay over three years at an interest rate of 8 percent per annum,” he said.

Official data indicates that the mining industry, which is Zimbabwe’s economic mainstay, presently employs over 50 000 people formally. Additionally, over 500 000 are employed in the informal sector.

Overall, the industry contributes over 75 percent of national export earnings, anchored by gold, which is the country’s biggest export earner.

Gold exports were expected to generate US$4 billion in 2023.

Through the ZMDC, sites have already been identified for the gold service centres across the country. These will be in addition to the already existing and operational facilities such as the Bubi Gold Service Centre, situated about 40 kilometres from Bulawayo, along Nkayi Road in Matabeleland North province.

The Government targets to establish about 20 gold service centres across the country.

“After Bubi, we have put up another gold service centre in Makaha (Mutoko), Mashonaland East province, and work is at an advanced stage to set up one in Mukaradzi, Mashonaland Central province.

“The target is to move to the next one in Penhalonga, Manicaland province. The process to set up gold service centres has been slow mainly due to the issues of procurement.

“Now, I think largely, the issue is the actual procurement of equipment and setting up of the gold service centres because where you set up the facilities, there are a lot of things that you have to do,” said Mr Kunaka.

“For example, we want access roads and all the civil works have to be done and also we want things like power, water and the like.

“These could be the factors that we thought have been militating against faster establishment of the gold service centres and with the US$5 million that we got, we can set up at least five service centres.”

Mr Kunaka said the Government was also in discussions with some private sector players for possible partnership to set up the centres.

In a separate interview, ZMDC managing director Mr Blessed Chitambira said his organisation received a US$2 million loan through BancABC for the gold service centres.

“What the Ministry of Finance, Economic Development and Investment Promotion has done is to have an arrangement with BancABC, and they (Treasury) are not giving us the money directly. We have to apply through BancABC to get a loan at an interest rate of about 8 percent.

“Out of the US$2 million that we have received, US$1 million will be used for Makaha and the balance, we are trying to use it for the Mukaradzi Gold Service Centre,” he said.