Zimbabwe passes new mining act as mineral production ramps up

By IM Staff
Published: Tuesday, 12 June 2018

The approval of new mining legislation in Zimbabwe seeks to open the country up to greater levels of investment and boost its output of minerals, such as chrome and lithium.

By Kudzai Mashininga

Zimbabwe’s parliament has approved new mining legislation and measures that reform controls imposed under the ex-President Robert Mugabe, with the goal of boosting production and wooing investors. The liberalizing measures dovetail with declarations from new President Emmerson Mnangagwa that the country – which has extensive lithium and chrome deposits – is now open for business.

The changes, which have been welcomed by the mining sector and opposition parties, have been in development since the resignation of Mugabe last November. Mnangagwa has pushed to secure the new mining laws ahead of a planned July 30 general election.

The old Mines and Minerals Act was outdated, having been initially passed by the white minority-based Rhodesian regime in 1961, amended under the Mugabe government in 1996 regarding rules on special leases.

An attempt at comprehensive reform was first begun under Mugabe – a bill being tabled in 2016 – but it suggested increasing a range of controls, and changes agreed since his fall from power have turned the law into a more business-friendly document.

Gone, for instance are plans to demand annual regulatory approval for any work undertaken by a mining company when exploiting government-issued leases. The same applies to a Mugabe-era proposal to require foreign mining companies to list locally.

The new law also intends to establish a computerized cadastral system to replace current manual mining title management.

For the first time, the law also recognizes small-scale miners and gives them security of tenure, bringing them under regulatory requirements to operate safely and with a view to protecting the environment.

It also provides for a dispute resolution mechanism regarding mining concessions and prohibits child labor in the industry.

The new law follows reforms approved in March to the Mugabe-era Indigenisation and Economic Empowerment Act, which aimed to increase black Zimbabweans’ ownership of mines by preventing foreign entities from having majority shareholdings in the sector. The revised law removed that requirement for mining operations for all minerals, except diamond and platinum.

The president of the Chamber of Mines of Zimbabwe, Batirai Manhando, said at his organization’s annual general meeting in May that the chamber had worked with the new government to reform the legislation.

"Renewed interest in the mining sector and the potential of a strong recovery in mineral prices is cause for optimism. The industry is poised to leverage on enhanced FDI [foreign direct investment] inflows and firming prices to retool and grow output," he said.

Manhando said in 2017, Zimbabwe’s mining industry revenues had grown 8.5% year on year, largely driven by significant output increases in chrome, gold, coal and diamonds. He said total mineral revenues increased to $2.6 billion from $2.1 billion in 2016. He stressed that the mining industry provides more than 40,000 formal jobs and work for more than 200,000 artisanal and small-scale miners.

Mines and mining development minister Winston Chitando told Industrial Minerals the government foresees growing Zimbabwe mining output over the next five years. "This year, the mining sector is poised for a major turnaround."

His government has been negotiating with Australia-based Prospect Resources Ltd to exploit the Arcadia project lithium deposit in Matabeleland - the company says it has more than 14 square kilometers of granted mining claims in "the largest code compliant hard rock lithium deposit in Africa".

As for chrome, the Minerals Marketing Corp of Zimbabwe (MMCZ) said in March this year that chrome ore production increased 92% year on year in 2017 to reach 122,010 tonnes, up from 63,394 tonnes in 2016.

Economics spokesman for the opposition party, the Movement for Democratic Change, Eddie Cross told Industrial Minerals that the appointment of Chitando, a former mining executive, after Mnangagwa’s rise to power, as well as the new law have started to give confidence to investors.

Noting that the old law was very outdated, he added that the legal recognition of small-scale miners so that they can enjoy legal title over their mineral rights, including security of tenure is a significant development.

"At the same time the minister has carried the larger miners with him and this Act is largely consensual in character. It will lay the foundations for rapid expansion of the industry and will provide a more secure operating environment," said Cross.

He, however, added that the new administration has yet to satisfactorily address challenges at the Marange Diamond fields where looting was rampant during the Mugabe era.

"Marange needs a top flight professional firm with the requisite skills and capital to exploit the hard rock mining that remains. Although the new government has recruited some skills and experience – the institutional structure is still not right," said Cross.

Chitando added: "This year the mining sector is poised for a major turnaround. In the gold sector, we expect to get 30 tonnes up from 26 tonnes, diamonds output will reach three million carats and we had already done one million carats by the end of May. By 2023, we anticipate that we will produce 11 million carats. Within five years, gold [production should reach] 80 tonnes."

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