Towards a developmental Zimbabwean minerals policy

Paul Jourdan Resource-Based Development Consultant

2

Draft Minerals Development Policy -

Chapters•Towards a Zimbabwean Mining Vision for the 21st Century•Introduction•Mineral Policy Principles•Mineral Endowment•Mineral-based Development•Minerals Governance.•Regulatory Framework•Equitable and Competitive Mineral Fiscal Regime•Strategic Minerals•Disputes Resolution and Advisory Capacity•Minerals Marketing•State Minerals Development Company•Transparent Benefits from Mining•Indigenisation•Competing Land Rights and Land Use Options•Minerals Knowledge Formation•Environmental Stewardship and Social Responsibility•An Integrated Mining Sector•Artisanal and Small-Scale Mining (ASM)•Developing with Broad Participation•Building Capable Institutions•Investing for the Future (Sustainable Investment)•Expected Outcomes

AU: AFRICA MINING VISION (AMV)“Equitable and optimal exploitation of mineral resources to underpin broad-based sustainable

growth and socio-economic development”This shared vision will comprise:oA knowledge-driven African mining sector that catalyses & contributes to the broad-based growth & development of, and is fully integrated into, a single African market through: Down-stream linkages into mineral beneficiation and

manufacturing; Up-stream linkages into mining capital goods,

consumables & services industries; Side-stream linkages into infrastructure (power, logistics;

communications, water) and skills & technology development (HRD and R&D);

Mutually beneficial partnerships between the state, the private sector, civil society, local communities and other stakeholders;

A comprehensive knowledge of its mineral endowment.

AMV recognises the critical importance of establishing the seminal mineral linkages,

whilst the resource is still extant!

4

Background

5

The founding values and principles of the new Constitution of Zimbabwe cover “…the principles of good governance, which bind the State and all institutions and agencies of government at every level [and] include… (j) the equitable sharing of national resources”. Furthermore, the new Constitution affirms the principle of “…equitable access by all Zimbabweans to the country’s natural resources”.

Mineral Policy Principles

Mineral resources belong to the NATION – not to the land owner, community or local

polity!Islands of prosperity will be overwhelmed by the sea of poverty

6

• In terms of procurement and other government contracts, including mineral leases, the new Constitution stipulates that: “An Act of Parliament must prescribe procedures for

the procurement of goods and services by the State and all institutions and agencies of government at every level, so that procurement is effected in a manner that is transparent, fair, honest, cost effective and competitive.

An Act of Parliament must provide for the negotiation and performance of the following State contracts-

• joint-venture contracts;• contracts for the construction and operation of

infrastructure and facilities; and• concessions of mineral and other rights;

to ensure transparency, honesty, cost-effectiveness and competitiveness.”

Mineral Policy Principles

7

Mineral Policy Principles

Consequently, this Mineral Policy is governed by the constitutional requirement for the transparent, fair, honest, cost effective and competitive -1) acquisition of exploration services,

through the issuing of exploration licenses, and

2) the leasing of mining properties, through the issuing of mining leases by the State.

8

Other mineral policy principles contained in “Getting Zimbabwe Moving Again” include:1) The facilitation greater exploration to identify and develop

new national mineral assets, both by the state and the private sector;

2) The elimination of resources hoarding and speculation, and the efficient extraction of resources;

3) The maximisation of value addition in Zimbabwe, both through increased beneficiation and local content;

4) The implementation of a mineral fiscal regime that optimises returns to the asset owner (the state) whilst still remaining attractive for investments by the operators;

5) The facilitation of small and medium scale mining, including support for mechanisation.

Principles: “Getting Zimbabwe Moving Again” (STERP)

Mineral Policy Principles

9

The new Constitution further states that: “…every person has a right to an environment that is not harmful to their health or well-being to have the environment protected for the present and future generations, through reasonable legislative and other measures that- prevent pollution and ecological degradation; promote conservation; and secure ecologically sustainable development and use of

natural resources while promoting economic and social development.”

Consequently this Mineral Policy seeks to balance economic and social development with ecologically sustainable minerals development.

EnvironmentMineral Policy Principles

Mapungubwe & Zimbabwe states (11th to 16thC): Gold trade via the eastern seaboard to the Middle East and Asia well-

established by c. 900 AD

trading dhow

History of Mining in Southern Africa

Ming porcelain

>4000 ancient gold mines inSouthern Africa

Background

Alienation of land and minerals• Mining integrated into European

economy (export-oriented) • Local entrepreneurs excluded from the

industry except as labour• Racial exploitation intensified under

settler regimes (Rhodesia & “apartheid”)• Destruction of pre-colonial economic

systems to supply mining labour through land theft, migrant labour systems, and police states.

• Huge mining profits! Golden Age of euro-settlers

Southern Africa Colonial period:

Background

MINERAL ENDOWMENT

PGM

PGM

PGM

PGM

Background

Deposits & Mines

13

Greenstone Belts

Great Dyke

Greenstone Belts

Karoo

Background

MAXIMISE THE 5 RESOURCE LINKAGES

5. FORWARDValue-addition: (beneficiation)

Export of resource-based

articles

3. BACKWARDInputs: Capital

goods, consumables, services, (also

export)

4. KNOWLEDGE Linkages (HRD &

R&D):“Nursery” for new

tech clusters, adaptable to other

sectors

2. SPATIALPuts in critical infra-structure to realise

other economic potential & could

stimulate LEDIf the linkages cannot be made, the people’s resources would be best

left unexploited- Need to maximise the developmental & inter-generational impact whilst still extant!

1. FISCAL: Capture & invest of resource rents (RRT) in long-

term economic physical & human

infra (inter-generational)

Use depleting assetsto underpin growth in

sustainable sectors

HRD, R&D

Mineral Based Development

Resource Extraction

Mining: Concentration, smelting, refining => metal/alloy

Forward Linkages:Intermediate products =>Manufacturing; Logistics;

other sectors (agriculture , forestry, fisheries, etc.)

Backward Linkages

Inputs:Capital goodsConsumables

Services

Knowledge LinkagesHRD: skills formation

R&D: tech developmentGeo-knowledge (survey)

Spatial Linkages:Infrastructure (transport,

power, ICT) and LED

Fiscal linkages:Resource rent capture &

deployment: long-term human & physical infrastructure

development

The MVC “cluster” (Mineral Linkages)

Knowledge linkages are a prerequisite for developing the crucial back/forward beneficiation linkages!

Mineral Based Development

THE FOREIGN CAPITAL (FDI) “TRADE-OFF”

1) Backward linkages: TNCs often have global purchasing strategies which are less likely to develop local suppliers;

2) Forward linkages: TNCs tend to optimise their global processing facilities which can deny local downstream opportunities;

3) Knowledge linkages: TNCs locate their high level HRD and tech development (R&D) in OECD countries,, thereby denying Africa the development of these critical linkages;

4) Fiscal linkages: Foreign companies have more scope & incentive to transfer price (tax evasion), especially FDI from “tax havens”;

5) In the longer term there are clearly political downsides to national resource being dominated by foreign capital.

In order to rapidly acquire the requisite capital, skills & technology, we need to use FDI (rather than mainly relying on domestic capital). However, this could compromise the seminal mineral linkages:

However, these threats can all be overcome with appropriate mineral policies & strategies and the

capacity to implement them!

Mineral Based Development

The MMA is essentially based on the principle of free mining, or “free entry”, or First-In-First-Assessed (FIFA claims system). Free mining includes:1) “a right of free access to lands in which the minerals are

in public ownership, 2) a right to take possession of them and acquire title by

one’s own act of staking a claim, and 3) a right to proceed to develop and mine the minerals

discovered.”*The MMA broadly fits into the World Bank’s widespread revision of African mineral regimes from the 80’s till current (return to colonial mineral regimes?)“..certain elements of the free mining doctrine that animated the nineteenth-century formulation of mining regimes in the American and British spheres have also guided the liberalisation process of African mining regimes over the 1980s and 1990s.”+

Free mining originated in small enclaves in Medieval Europe but was formalised in North America & other European colonies in the 19th century, as a vehicle to promote dispossession & colonisation. Today it is promoted as “best practice” by the OECD & Bretton Woods!

“Free Mining” Colonial Plunder Mineral Regimes

Sources: *Barton 1993 & +Campbell 2010

Minerals Governance

Current: Mining & Minerals Act: Based on a free entry CLAIM (BSAC)

Prospecting License (PL):Size: 300m radius from prosp. noticeTenure: 2y, non-transferableEligible: AP or Co w/exclusive AP rep, Zim residentReport at end for conversion

EPO: exclusive prospecting order(EEL: exclusive exploration license) Authority: MAB to President (to Minister)Size: Coal & HCs 130000Ha; pm’s p-stones 2600Ha; other 65000Ha (650km2) ; (All: 65000Ha)GROUND RESERVED IMMEDIATELY (sterilised!)Tenure: 3y + 3y (2c/Ha/m), (2y, fees escalate, ground released) ; Transfer: Yes via MABReport: Pgm of work 6m; End Report ZGS

Approved Prospector (AP)(Staking Agent)Tenure: 5y + 5y(?)Eligible: >18y, Zim resident

Special Prospecting License(not in proposed amendments)Permits up to 150 claims (1Ha each), plus extra-lateral rightsTenure: 2y, non-transferableEligible: AP or w/exclusive AP rep, Zim resident

Claim

Minerals Marketing Via MMCZ except Au and SML minerals

Marketing on Own A/CSML- only Zimplats & Unki

Gold Marketing Authorised Dealer (MoF - ex ResBank)

Mining Lease (claim consolidation)Auth : MAB. Objections -> Admin CourtSize: Contiguous mining locations?Tenure: infinite, (life of mine, ≤25y (time= workplan= resources))Transfer: Yes, w/auth of MABReporting: Monthly ops, Biannual work

Special Mining Lease (SML): Capex >$100mn, predom. export minsSize: Contiguous mining locations?Tenure: 25y, renew 10y - infiniteEligible: Zim citizen; Transfer: YesReport: EIA, Feas. study & Fin/mkting & Work Plan at outset; Monthly Ops:

Mining: (Worked Claim)Size: 1 block: prec minerals of 10 claims of <1Ha (500X200m=10Ha), or 1 block base metals of 25 claims (25Ha); Plus extra-lateral rights. (ASM: 4 claims of ?Ha, No extra-lateral rights)Tenure: infinite if worked or fees paid.(Infinite only if worked)Transfer: Yes, w/auth of MAB Reporting: ?

Retention License Auth: MABTenure: ?

MAB: Mining Affairs Board; HCs: Hydrocarbons; ASM: Artisanal & Small-scale Mining

19

Regulatory FrameworkGovernment has resolved to overhaul the Mines and Minerals Act and introduce a new state-of-the-art Minerals Development law that will maximise the impact of mineral assets on growth and development, whilst remaining attractive for private sector investment:

• The new system will attempt to optimise a “claims” (FIFA) system alongside a price discovery (public tender) system, in accordance with the Constitution

• The mineral title system will encourage active mineral exploration and exploitation but discourage sterilisation for speculation and/or other purposes.

• Disputes relating to mineral rights will be addressed in a timely and fair manner by government and, if no settlement is reached, the courts of Zimbabwe.

• An accessible web-based mining cadastre information management system (MCIMS) will be established that will enhance transparency in the award and monitoring of mineral rights.

• The allocation of resources to strengthen the institutions with oversight responsibilities is a critical part of Government’s development program.

• Government will develop mechanisms to ensure sustainable mining of minerals for construction and traditional purposes.

20

ExplorationTerrain (FIFA)

Exploration License(w/mining lease automaticity)

Progressive Tax (e.g. APT/RRT)

“Mining Charter” type conditions

Knownassets

Unknown assets

DelineationTerrain

SMC or Auction on:• Tech/Fin Capability• Rent share (RRT)• Back/Forward Linkages• Infra development• HRD & R&D, tech transfer• Indigenisation, Etc...

Mining Concession/Lease

PartiallyKnown

Exploration Terrains

Geo-ReserveTerrain

•Further geo-survey: ZGS, SMC (ZMDC) or sub-contractors

•Risk exploration for future step-in rights.

Zimbabwe - Hybrid “free mining” & public tender regime

Minerals Governance

21

Typical National Mineral Resource Base

Competitive Tender System FIFA (claim) System

22

Regulatory FrameworkThe Government is committed to the creation of a stable

and conducive business climate, including:• an open, transparent and competitive auction procedure

for known mineral deposits, in accordance with the new Constitution;

• a predictable exploration licensing system for terrains with unknown deposits;

• a secure mining licence (lease) term (max 25 years) against CRIRSCO compliant reserves commensurate with the production plan (~200%?);

• clear procedures on the granting of an amended licence if further reserves are delineated; and

• clearly defined rules and regulations that:oSet out simple and transparent procedures for the

allocation of rights, oStipulate the conduct of exploration activities, oDefine the transition from exploration to mining rights

and the transfer of these rights,oRegulate the conduct of mining,oDefine local content and value-addition obligations.oStipulate local skilling and technology development

commitments.oGuarantee security of tenure and the orderly carrying

out of business, oEnsure exclusivity of specified mineral rights over

licensed areas.

23

Equitable and Competitive Mineral Fiscal Regime

Resource Rents: • Mineral deposits often embody significant “resource rents” which

are profits in excess of the normal rate of return, arising from the particular above average nature of the deposit (grade, yield, location, etc.) or scarcity of the mineral/s.

• Such excess windfall rents need to be equitably shared between the asset owner (Zimbabwe) and the asset exploiter.

• An equitable Resource Rent Tax (RRT) will be introduced that will replace the current Additional Profits Tax (APT) and contribute to a Sovereign Wealth Fund (SWF)

• Other taxes that add to the cost of mining, such as royalties and fees, will be reviewed in the light of the RRT, recognising that these raise the mining cut-off grades and consequently sterilise national mineral resources.

Government will institute a well-designed fiscal regime that encourages investment, optimises economic linkages, exemplifies transparency, and captures reasonable revenue (including resource rents) for the

Zimbabwean people, within the confines of achieving national fiscal and regulatory economic uniformity.

MINERAL RESOURCE RENTS

= better deposit

= Demand > Supply: limited resources Resourc

e Rents

Return on Investment (ROI) > costs including minimum return to effect the investment

Resource Rent Tax (RRT): 50% of ROI greater than Long Bond plus 7%?

NO IMPACT ON MARGINAL OR AVERAGE DEPOSITS!

Inputs(purchases)

Labour

“Normal” ROI

Resource Rents =

“luck” rentsMiner

State

Time t

Tax

Equitable and Competitive Mineral Fiscal Regime

Royalties/fees add to costs, increase the cut-off grade and constrain new mines

Rather capture surplus: Resource Rent Tax (RRT)

to fund a SWF (inter-generational) including a fiscal stabilisation fund and

minerals development fund

Equitable and Competitive Mineral Fiscal Regime

25

Gra

de

Reserves

Cut-off Grade with high royalties/fees/levies

Cut-off Grade

Δ tons Additional mines or mineable reserves

Impact of Royalties & Fees/Levieson New Mines or Mineable

Reserves

Δ Cost

Mineable Resources

HOWEVER, THE SURPLUS DECLARED CAN BE DRAMATICALLY REDUCED THROUGH TRANSFER

PRICING

Inputs, Raw Materials

Labour

Finance charges

Transfer Pricing

Under-invoicin

g of salesOver-

invoicing of

costs

PROFIT

Profit transferred to a low tax

jurisdiction

Equitable and Competitive Mineral Fiscal Regime

•Assess tax self-audit, (revenue >$200mn?)•Assess not accepting FDI from tax havens

27

Government recognises that certain minerals are “strategic” for national growth, development and job creation. The new Minerals Development Act will set up clear and transparent guidelines for the designation of select “strategic minerals” that are critical feedstocks into other sectors of the economy, or where Zimbabwe has strategic resources globally (producer power), including:

• manufacturing jobs- iron/steel (ferrous ores, coking coal), polymers (fossil fuels) and base metals ;

• agriculture - fertilisers (NPK) and conditioners;• infrastructure – cement (limestone), steel and copper;• power - fossil fuels (coal/gas)

Where appropriate, the State will regulate the extraction rates of these strategic minerals to ensure long-term availability for domestic supply and will, if necessary, regulate the pricing of these minerals into the domestic economy. Such pricing will reflect a reasonable rate of return to private investors. The ZMDC will be tasked with developing such critical mineral feedstocks to be supplied into the domestic economy at developmental prices (utility returns) to facilitate downstream economic activity.The designation of “strategic minerals” will be done in a fair, objective and transparent manner.

“Strategic Minerals”

28

The proposed Minerals Development Law will cater for a Minerals Development Board, comprised of representatives from government, industry, labour, universities and experts. The key functions of the proposed Minerals Development Board will include:• Advising the Minister on the allocation of exploration and mining

licenses/leases;• Advising the Minister on reasonable value addition, local content,

skilling and technology development targets (milestones);• Advising the Minister on the designation of select “strategic

minerals”;• Determining appropriate extraction rates and domestic pricing of

such “strategic minerals”;• Advising the Minister on the suspension and/or cancellation of

mineral rights that fail to comply with the law/regulations;• Dispute resolution on competing mineral rights and domestic

mineral pricing;• Developing medium to long-term national minerals development

strategies; and• Advising the Minister on improvements to the Mineral Regime

including amendments to the prevailing legislation;The Minerals Development Board will be suitably resourced to carry out its duties through the national budget and/or a judicious mining levy with a minimal impact on the cost of production.

Disputes Resolution and Advisory Capacity

29

•The State of Zimbabwe reserves the right to market the people’s mineral assets, but undertakes to recompense the miner at fair and transparent market prices for mineral exports. This will be undertaken in compliance with the Minerals Marketing Corporation of Zimbabwe Act [Chapter 21:04] of 1982 for all minerals except for precious metals. •Gold and the platinum group metals (PGMs) will be marketed through an Authorised Dealer, designated by the Ministry of Finance under the Gold Trade Act [Chapter 21:03 12] of 2006, which will be amended to include the PGMs.•Government will ensure that miners get fair value for the minerals exported and that marketing commissions are internationally competitive. In this regard Government will undertake a review of the MMCZ’s commissions to ensure that they are cost reflective and do not prejudice the minerals sector.

Minerals Marketing

30

•The Zimbabwe Mining Development Corporation (ZMDC) was established by The Zimbabwe Mining Development Act” [Chapter 21:08] of 1982. •Government undertakes to review its mandate in the light of this Minerals Development Policy, with a view to it becoming a key state institution for facilitating both strategic minerals development and the development of the crucial mineral economic linkages. •Government will also assess the efficacy of giving the ZMDC a three month first-sight window on all new state financed geological data (geo-survey maps and data), to enable it to reserve potential deposits of designated strategic minerals.

State Minerals Development Company

31

• EITI: The Government of Zimbabwe is committed to transparency through the provision information on revenue flows and other benefits obtained from mining. To this end, it will rigorously assess the efficacy of accession of Zimbabwe to the Extractive Industries Transparency Initiative (EITI) and the EITI Standard and EITI Rules. •:Communities (CSI):The Government of Zimbabwe will ensure that communities that are or could be adversely affected by mining operations derive regular and significant benefits from those operations:

• A predictable matrix will be configured to determine such benefits, which will include but not be limited to revenue allocation, access to employment, the provision of infrastructure for local use and resources for local education and skills formation.

• Mining companies will be encouraged to develop local supply chains for their purchases, thereby integrating themselves into the local economy.

Transparent Benefits from Mining

32

•Prior to the European colonial invasions minerals were extracted by Zimbabweans for Zimbabwe, but during the 20th Century Zimbabwe’s minerals were predominantly mined by Europeans for Europe and its offshoots. •The medium to long term goal of the Government of Zimbabwe is for the nation’s natural resources to be predominantly exploited by indigenous Zimbabweans. •Many successful mining countries reserved mineral exploitation for their citizens, such as some European states (in the past) and several Asian states (currently). •However, given the current capital, skills and technology constraints facing the sector, the GoZ seeks to encourage FDI that overcomes these impediments and progressively builds local capital, skills and technological prowess.•Mining leases also need to include indigenous purchasing targets to develop local SMMEs and local content.

Indigenisation

33

= quasi tax, depending on how the equity is funded

If we want FDI in mining, then 51% indigenisation could be a major constraint: Both the uncertainty and quantum

(51%) time-line! However, it could be “finessed” by

clarification (certainty) and by making the target 20% by year 10, and 51% by year 25

(or 50% of resource life)This is then unlikely to be a

major constraint to FDI into new projects

Indigenisation

NOTE: The 10% community “free carry” could create future problems of rich (mining) and poor (other) communities

(inequity)!

34

Learn from the SA BEE experience!

Facilitate wealth creators not hitch-hikers!

This is will promote both growth AND indigenisation

IndigenisationMin

ing

Indu

stry 10-20%

equity

IndigenousVCF

(debt & equity)

Indigenous mining & linkages

investment projects

35

Gra

de

Reserves

Cut-off Grade with indigenisation premium

Cut-off Grade

Δ tons Additional mines or mineable reserves

Impact of Indigenisationon New Mines or Mineable

Reserves-Could restrict FDI to rich deposits

only

Δ Risk

Mineable Resources

Indigenisation: Impact on FDI

Increases the hurdle rate (ROI) = increases cut-off grade = sterilises resources! But negligible if 51% on renewal

36

Minerals Knowledge Formation (STEM skills and technology development) is critical to growing and indigenising the minerals sector as well for developing the seminal minerals economic linkages, particularly the backward (inputs) and forward (beneficiation) linkages. In this regard Government will:

• Commission a survey to identify the critical minerals technical skills needs and develop of a national minerals (and linkage industries) HRD strategy;

• Develop a strategy to re-attract skills from the diaspora; • Introduce a minimum knowledge corporate spending target

of a percentage of payroll to fund local STEM skills formation and technology development;

• Assess the efficacy of converting tertiary state tertiary technical training costs into notional student loans to be worked off over 15 years by working in-country;

• Rebuild mineral technology development institutions (Institute for Mining Research, Government Metallurgical Laboratory, Bulawayo School of Mines);

• Use of a portion of the proposed RRT to fund knowledge formation, in partnership with the industry;

• Investigate the establishment of a dedicated Minerals Technology Fund (MTF) and a Minerals Skills Fund (MSF), as a Public-Private Partnerships (PPPs) with the mining industry, pedagogical institutions and state enterprises (ZMDC) and institutions.

Minerals Knowledge Formation

37

Knowledge Levy, GoZ, ZMDC, Mining Industry, Donors

MINERALS SKILLS FUND

Local Universities

Local Colleges

Local Schools

Funders

MSF

Targets

Possible Minerals Skills Fund (MSF) Structure

Knowledge Linkages

Possible Minerals Technology Fund (MTF) StructureKnowledge Fund, State, ZMDC, COMZ, Mining

Industry, Donors

MINERALS TECHNOLOGY FUND

Research

& Development

Institutes

Private

sector

tech. dev. capacity

Local Universities & Colleges

Funders

MTF

Targets

Investigate the establishment of a Minerals Skills Fund and a Minerals

Technology Fund

Minerals Knowledge Formation

38

The concept of Spatial Development Initiatives (SDIs, also known as “Development Corridors”) was developed in southern Africa and is based on using high-rent resource exploitation projects as anchors for the development of infrastructure that can then underpin the development of other sustainable economic potential such as:

• agriculture (and agro-processing),• forestry (and processing),• tourism,• manufacturing, etc. and• other related and ancillary industries in the

area. The promotion of such integrated Spatial Development Initiatives, to unleash the full growth and development potential, will form an important feature of Zimbabwe’s resources development policy.

An Integrated Mining Sector – Spatial Linkages

A low-cost national logistics corridor could catalyse widespread

growth in other sectors such as agriculture &

manufacturing

The 33 billion ton Mwanesi iron ore deposit could underpin:•A heavy-haul rail corridor (80Mtpa);

•A Development Corridor (DC), port & SEZ with Mozambique;

•Downstream steel projects;

New Port &SEZ

CASE STUDY: Potential Competitive Tender of a

Known Resource(not a back door deal with no price

discovery)

Element Mechanism Scoring Tax Rate (RTT)* Bid up from, say, 50% 40%Downstream Bid up % extra VA (iron/steel)

above base product (conc) exports 20%

Upstream Bid up % local content (VA) purchases @ 5y, 10y, 15y, 20y

20%

HRD & R&D Bid up $/an local spend- 10%Extra infra-structure

Bid up % extra capex for open access infrastructure capacity

10%

Total 100%

Mwanesi-Beira DC

Tender bid evaluation elements

Similar coal corridor from Byo

to Maputo?

42

Need urgent investment into• coal-based power• CBM-based power (CCGT)• longer term HEP

Assess power PPPs (Sengwa?)Assess short-term import of power from Tete basin (HEP & overburden coal-based power)

An Integrated Mining Sector – Spatial Linkages

Power is currently the major constraint to mining/smelting

growth

Economies of Scale: Regional Integration• The small size and relative isolation (landlocked) of the

Zimbabwe market constrains manufacturing growth which could be overcome by increasing regional economic integration with southern Africa;

• The region (COMESA, SADC, SACU) has a rapidly growing minerals inputs market and significant future mineral potential:

• Zimbabwe supplier industries cluster would be substantially enhanced through equitable regional economic integration.

• Assess Producer Power strategies with regional producers (e.g. PGMs with SA);

• Assess regional HEP strategy and regional gas strategy to access lower cost and cleaner energy (HEP & CCGT).

An Integrated Mining Sector

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

100200300400500600700800900

1000SADC GDP (PPP - million of international dollars)

Markets: Sub-Saharan Africa & World GDP Growth

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011-1012345678

SSA GDP Growth (constant prices, % change)

Sub-Saharan Africa World

Regional Trade Strategies are Critical to Growing the Backward Linkages

45

Artisanal and Small-Scale Mining (ASM)

•The pre-existing ASM support system will be rebuilt and reinforced:

• extension services (DMC, regional geologist, GML, BSM),

• finance (DMC equipment hire-purchase pound, loan fund), &

• marketing/quality (GML and MMCZ). •These three components constitute the institutional “Golden Triangle” for successful ASM development. •Government will encourage the creation of an ASM window in Venture Capital Fund (VCF) as a PPP between the state, the Chamber of Mines, DFIs and donors (possible indigenous commitment capitalisation). •To enable artisanal and small-scale miners to obtain loans, assess methods of enhancing their asset/resource creditworthiness, •To facilitate environmental compliance, the concept of “Designated ASM Zones” (DASMZ) will be assessed with EMA, where the state will carry out a SEA and build the requisite amelioration modalities into the ASM license conditions, and •GSD will undertake detailed mapping of the ASM zone (1:50k?);•Joint government inspections (MoM, EMA, MoF, etc.) for greater coordination and policy coherence.

46

ASM support “Golden Triangle”DMC pound,

Regional Geologists, GML,

BSM, tech manuals

GML, MMCZ, (Res

Bank?)

DMC hire-purchase pound, VCF?

Artisanal and Small-Scale Mining (ASM)

“Designated ASM Zones” (DASMZ) – terrains conducive to ASM, with

focussed SEA & support

Large Scale & ASM Symbiosis?

“outgrower concept”

47

Outcomes MatrixThe impact of the minerals sector on the broad national development goals will be regularly assessed in terms of its contribution to:1) national revenue and foreign exchange earnings, 2) gross fixed capital investment,3) the creation of inclusive sustainable indigenous

employment, 4) the provision of raw materials for downstream industries

and national reconstruction, 5) the provision of markets for local supplier industries (local

content),6) the improvement in social and physical infrastructure, 7) the stimulation of new economic activity through the

provision of the requisite infrastructure;8) the development of indigenous capital and

entrepreneurship,9) positive impacts on the environment and local communities;10)the development of sustainable ASM operations and

communities, 11)the improvement of mining health and safety indices, and12)the improvement in national knowledge infrastructure

(STEM skills formation and technology transfer and development).

48

Way Forward?1) Ministry to amend and sign-off on “Draft Minerals Development Policy”

2) Stakeholder consultations:a) Post draft on the Ministry websiteb) Road-show (public meetings) to main mining centres:

i. Harareii. Bulawayoiii. Gweruiv. Masvingov. Mutarevi. Kadomavii. Chamber of Mines workshopviii. Intra-governmental workshop

c) Incorporation of inputs into final DRAFT3) Minister to present amended Minerals Development Policy to

Cabinet;4) Initiate drafting of New Minerals Development Act to give effect to

the National Minerals Development Policy;5) Take the Draft Act through the parliamentary process.In parallel, establish working MCIMS, to facilitate

orderly & predictable transition to the new Minerals Development Act

49

THANK YOUTATENDA

NGIYABONGAKE A LEBOGA

ZIKOMO KWAMBERI

Website for full report: www.zeparu.co.zwMinistry of Mines website: www.mines.gov.zw

Dr Paul Jourdan: paulj1952@gmal.com

FULL REPORT: “MINING SECTOR POLICY STUDY”

http://www.zeparu.co.zw/index.php?option=com_jdownloads&Itemid=288&task=viewcategory&catid=38.

ZEPARU website: www.zeparu.co.zw

AU/UNECA: AMV & “MINING AND AFRICA’S DEVELOPMENT”

AMV website: www.africaminingvision.org