The high cost of predatory pricing in Zim’s chrome mining
BY THE CLIFF CHIDUKU
PASSENGERS along the Gweru-Zvishavane highway can’t help but shake their heads with dejection as they watch the once-picturesque landscape slowly transform into unsightly craters and ravines – the work of small-scale miners scooping up tons of soil in pursuit of fortunes hidden under the earth belly.
When NewsDay Weekender Visiting Shurugwi last week, dozens of people could be seen loading dirt and fleeing with trucks carrying piles of sedentary stones from makeshift mines dotted around the area.
While locals worry as they helplessly watch their surroundings turn into wasteland, the activities are a boon for those in the thick of it, especially Chinese miners.
Tafara Nelson (38) says that while chrome mining has been her only source of income for the past decade, it is not rewarding.
“Since we don’t own mining equipment, we depend on Chinese entrepreneurs. After providing us with materials, we are required to sell our products to them, ”he says.
Nelson, who is hired by Chinese miner Jinan, says the language barrier also makes it difficult for them to negotiate fair payment terms.
“The result is that we get unfavorable conditions,” he adds.
Another small-scale miner, Martin Chitohwa, hired by Zimasco, says that as long as the status quo remains, residents will work for nothing.
“Contracted miners only get the price of the final product when they are graded and weighed in their Kwekwe factory. Who will ever know if the classification and weighing were done fairly? Chitohwa asks rhetorically.
“They usually come to look for the ore at night. In the morning, for example, we are told that your chromium ore was 22 tonnes. Of that 15 tons were in pieces and seven tons were fines and the grade was 42%, so we pay you for the 15 tons at the agreed price which is usually low.
“They penalize you on the fines. However, some smelters accept both fines and tough lumpy ores and the price is irrelevant as long as your fines are free of rubble.
He says predatory pricing is pushing local miners out of business.
Chinese company Sinosteel Corporation is the largest shareholder in Zimasco, one of the country’s largest chrome mining companies.
Jinan official Zhou Zhengliang said that while he doesn’t deny that there are bad apples in the chromium value chain, their operations are flawless.
Zimasco chief executive John Musekiwa had not responded to questions sent to him at the time of printing.
However, the president of the Confederation of Chrome Miners Association, Isaac Muguti Chivendera, said foundries have been mining small-scale miners for too long.
“Small-scale miners go home empty-handed after delivering their product to private foundries, especially Chinese,” he says.
“Buyers come to our demands and promise good prices, say US $ 55 per tonne, transport the product to their smelters, then when you get there they factor in transport costs and fines like breakage. , then end up taking ore for a song, then it becomes difficult to continue mining because we pay up to US $ 20 per tonne for labor.
Former Zimbabwe Mining Federation vice-president (chromium and base metals) Simon Sigauke said this was a worrying development as Zimbabwe is losing out to unscrupulous buyers.
“Chinese miners rent machines from small-scale miners at exorbitant prices and get their money back by buying their products. Our all-time friends are killing off equipment they would have imported duty-free, ”he said.
“To make matters worse, most Chinese companies don’t issue invoices as proof of payment. One wonders how these minors account for their tax obligations. Apple Bridge urgently needs revival.
Apple Bridge was a state-owned entity, which bought chrome from small-scale miners after complaining about it being stolen by private smelters buying the ore below market price. However, it faces sustainability issues.
“The government is in dire need of resuscitating Apple Bridge for viable price monitoring and protection of local miners from exploitation by unscrupulous merchants,” adds Sigauke.
However, analysts say that predatory pricing in one of Zimbabwe’s main exports will negatively impact the socio-economic well-being of the country.
“Illicit Financial Flows (IFFs) caused by underhanded transactions in the mining sector have deleterious effects on both the economy and society, putting into perspective that minerals are Zimbabwe’s cash cow,” says Babra Maiwasha, University of Zimbabwe Lecturer on Natural Resource Governance.
“It is relevant to note that the achievement of the US $ 12 billion mining sector and the broader Vision 2030 relies on the mining sector to increase national revenues. This precipitates the need for reforms and effective guarantees to promote transparency and accountability in the mining sector, ”she adds.
“Although these IFFs are difficult to quantify, they have a negative effect on the socio-economic status of the country as funds that could have been used to develop these areas are instead illegally transferred to tax havens through ‘a myriad of tax evasion tactics, “said Farai Maguwu, director of the Center for Natural Resource Governance.
The mid-term monetary review presented by Finance Minister Mthuli Ncube last month was grim, revealing that 2020 chromium production, at 1,272 million tonnes, remained below the annual target of 1,800 million. tonnes and was 18% lower than 2019 production of 1,550 million tonnes.
Based on the potential of the sector, the government launched in 2019 an ambitious mining sector economy of US $ 12 billion by 2023, an increase of 312% from the current US $ 2.91 billion.
- This story was written as part of Wealth of Nations, a media skills development program run by the Thomson Reuters Foundation. More information on www.wealth-of-nations.org. The content is the sole responsibility of the author and the publisher.
- Follow Cliff on Twitter @ChifChiduku
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