First Mining Drc-Zambia March -April 2020 digital edition First Mining Drc-Zambia March - April 2020 digital | Page 22

FEATURE
The existence of these licensing fees
may have contributed to the growth of
the small-scale mining sector, a more
accessible, decentralised approach to
mining in Zimbabwe that was making
strides towards establishing itself as
a financially significant sector. A 2016
report from PACT found that by 2016,
artisanal gold mining was the third-
largest contributor to national GDP from
the mining sector, responsible for 21%
of value, behind just PGM mining (32%)
and large-scale gold mining (26%). Zimbabwe is likely to continue in its
current form, without regularisation.”
Yet a tightening of mining regulations
could ultimately limit the productivity of
the artisanal mining sector, effectively
capping the potential of Zimbabwean
companies to mine for resources. External economic pressures and
political changes have also further
muddied
the
country’s
mining
framework. In 2017, South African
magazine Business Day reported that
the Zimbabwean economy had halved
since 2000, and inflation rose by 176%
across the national economy in June
2019 alone, according to the country’s
National Statistical Agency.
“If
the
Zimbabwean
government
implements the ‘use it or lose it’ principle,
it is unlikely that the small-scale and
artisanal miners would be able to step
in, and take over those operations,” said
Beech. “These operations will require
significant investment, which is often not
available to the small-scale and artisanal
miners.
“Until significant incentives have been
implemented by the Zimbabwean
Government for the small-scale and
artisanal miners to regularise their
mining activities by making the licencing
process an easy process, which is cost
effective, and can be implemented
without onerous obligations, the small-
scale and artisanal mining sector in
Winners and losers
“Ironically, if the principle ‘use it or lose
it’ is strictly applied, the Zimbabwean
state-owned mining company may be
the biggest loser,” said Beech, “because
the operations that fall under the state
mining company, have not started
operations or carried on operations
as they are required to do in terms of
Zimbabwe’s mining laws.”
Furthermore, the fall of Mugabe’s regime
in 2017 led to another round of reforms
for the country’s mining sector.
In March 2019, the 51% ownership
requirement was scrapped, and later in
the year, the ‘use it or lose it’ scheme
was extended to all of the country’s
mines, creating a hybrid system of laws
and pressures that aims to encourage
the foreign investment and production
that characterised the 20th century, while
maintaining the local ownership and
responsibility implemented in the 21st.
20
Beech noted that this hybrid policy
“does open up opportunities for other
investors, who may have a more risk-
tolerant approach to investment,” and this
combination of legal frameworks could
ultimately benefit some of the larger
foreign miners, such as Anglo American.
The company estimates that it has
access to 52.5 million tonnes of reserves
of platinum group metals in Zimbabwe,
but is currently only producing platinum
from a single project, the Unki mine.
With production estimated to reach
around 88,000 ounces in 2019, there
is significant scope for improvement
as the miner could be forced to begin
developing the resource licences it
holds.
Yet regardless of which policies are
implemented, Zimbabwean companies
could stand to lose the most, as a
confused regulatory framework will
continue to disadvantage local miners,
and those with smaller financial
reserves. Beech concluded that: “it is
more important, in my view, to address
the policy and regulatory certainty,
particularly surrounding indigenisation
laws, and to develop infrastructure.
“The more certainty there is regarding
policy and regulatory frameworks, the
more investment will flow to Zimbabwe,
and it is usually far easier to grant new
prospecting rights and mining rights,
than tampering with existing rights.”
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