Harare, Zimbabwe — 20 May 2013 – The Chamber of Mines of Zimbabwe, which represents companies including platinum giant Impala Platinum Holdings Limited, has rejected a proposal for the state to control mineral production and prices.
The proposal is “gritty and confrontational,” the Chamber said in a draft copy of its response obtained by Bloomberg News, which may be given to the government later this month. “Ideologically the policy seems to be at variance with the market-based national policy that the country has adopted,” it added.
Earlier this month, the country’s Ministry of Mines proposed the auctioning of mineral deposits; the restriction of production of commodities deemed strategic; and that the state sell the output from all mines. It is now seeking comment from mining companies before taking the proposed policy to parliament to have it passed into law.
Companies such as Impala and Rio Tinto Group are currently free to sell their own minerals. The policy proposals come after Impala and Anglo American Platinum agreed to comply with the existing indigenisation law to cede 51% stakes in their local assets to black Zimbabweans or the government.
“We will contribute effectively to the ongoing development of a new mining policy,” Chamber of Mines president Alex Mhembere told the body’s annual general meeting, held in north-eastern Zimbabwe at the weekend. “We do not regard our role as opposition to government but partners seeking the same national goal and aspiration.”
The chamber is due to meet the government on May 22 and again on May 29.
If implemented, the marketing policy will be a reversal of an earlier liberalisation of mineral sales, which formerly had been undertaken by the Minerals Marketing Corporation of Zimbabwe and, in the case of gold, a unit of the central bank. Under the proposal, gold and platinum group metals will be sold by a dealer authorised by the Ministry of Finance, and all other minerals will be sold by the MMCZ.
“This policy on minerals marketing is premised on the notion that the private sector cannot be trusted,” the Chamber of Mines said. “Throughout the world producers have the right to market their own minerals based on an approved marketing contract.”
Zimbabwe’s economy entered a recession around 2000 after a disputed election and the imposition of a land reform policy that involved the seizure of white-owned commercial farms. Over the next decade the government controlled prices and imports. Inflation rose to 500 billion percent, according to the International Monetary Fund, and the economy contracted by 40% between 2000 and 2007.
The country exited recession in 2009 and ended a political stalemate after President Robert Mugabe’s Zimbabwe African National Union-Patriotic Front formed a coalition government with the Movement For Democratic Change following the intervention of the 15-nation Southern African Development Community.
The proposals “will effectively close the country to private exploration,” the Chamber said. The government document “is based on socialist thinking, where the state has a strong hand over the affairs of mineral extraction. Zimbabwe has largely been a market-based economy.”
Source: Bloomberg News. For more information, click here.