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Towards a developmental Zimbabwean minerals. policy

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1 Towards a developmental Zimbabwean minerals. policy
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

3 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: A 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 Mineral Policy Principles
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 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 Mineral Policy Principles
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.”

7 Mineral Policy Principles
Consequently, this Mineral Policy is governed by the constitutional requirement for the transparent, fair, honest, cost effective and competitive - acquisition of exploration services, through the issuing of exploration licenses, and the leasing of mining properties, through the issuing of mining leases by the State.

8 Mineral Policy Principles
Principles: “Getting Zimbabwe Moving Again” (STERP) Other mineral policy principles contained in “Getting Zimbabwe Moving Again” include: The facilitation greater exploration to identify and develop new national mineral assets, both by the state and the private sector; The elimination of resources hoarding and speculation, and the efficient extraction of resources; The maximisation of value addition in Zimbabwe, both through increased beneficiation and local content; 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; The facilitation of small and medium scale mining, including support for mechanisation.

9 Mineral Policy Principles
Environment 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.

10 History of Mining in Southern Africa
Background History of Mining in Southern Africa 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 >4000 ancient gold mines in Southern Africa Ming porcelain

11 Southern Africa Colonial period:
Background Southern Africa Colonial period: 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

12 Background Mineral Endowment Deposits & Mines

13 Background Greenstone Belts Karoo Great Dyke Greenstone Belts

14 Maximise the 5 resource linkages
Mineral Based Development Maximise the 5 resource linkages 5. FORWARD Value-addition: (beneficiation) Export of resource-based articles 1. FISCAL: Capture & invest of resource rents (RRT) in long-term economic physical & human infra (inter-generational) Use depleting assets to underpin growth in sustainable sectors 4. KNOWLEDGE Linkages (HRD & R&D): “Nursery” for new tech clusters, adaptable to other sectors 2. SPATIAL Puts in critical infra-structure to realise other economic potential & could stimulate LED 3. BACKWARD Inputs: Capital goods, consumables, services, (also export) HRD, R&D If 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!

15 Mineral Based Development The MVC “cluster” (Mineral Linkages)
Spatial Linkages: Infrastructure (transport, power, ICT) and LED Forward Linkages: Intermediate products => Manufacturing; Logistics; other sectors (agriculture , forestry, fisheries, etc.) Backward Linkages Inputs: Capital goods Consumables Services Resource Extraction Mining: Concentration, smelting, refining => metal/alloy Fiscal linkages: Resource rent capture & deployment: long-term human & physical infrastructure development Knowledge Linkages HRD: skills formation R&D: tech development Geo-knowledge (survey) Knowledge linkages are a prerequisite for developing the crucial back/forward beneficiation linkages!

16 The foreign capital (FDI) “trade-off”
Mineral Based Development The foreign capital (FDI) “trade-off” 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: Backward linkages: TNCs often have global purchasing strategies which are less likely to develop local suppliers; Forward linkages: TNCs tend to optimise their global processing facilities which can deny local downstream opportunities; 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; Fiscal linkages: Foreign companies have more scope & incentive to transfer price (tax evasion), especially FDI from “tax havens”; In the longer term there are clearly political downsides to national resource being dominated by foreign capital. However, these threats can all be overcome with appropriate mineral policies & strategies and the capacity to implement them!

17 “Free Mining” Colonial Plunder Mineral Regimes
Minerals Governance “Free Mining” Colonial Plunder Mineral Regimes 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: “a right of free access to lands in which the minerals are in public ownership, a right to take possession of them and acquire title by one’s own act of staking a claim, and 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! Sources: *Barton 1993 & +Campbell 2010

18 Current: Mining & Minerals Act: Based on a free entry CLAIM (BSAC)
Approved Prospector (AP) (Staking Agent) Tenure: 5y + 5y(?) Eligible: >18y, Zim resident Mining Lease (claim consolidation) Auth : MAB. Objections -> Admin Court Size: Contiguous mining locations? Tenure: infinite, (life of mine, ≤25y (time= workplan= resources)) Transfer: Yes, w/auth of MAB Reporting: Monthly ops, Biannual work Special Mining Lease (SML): Capex >$100mn, predom. export mins Tenure: 25y, renew 10y - infinite Eligible: Zim citizen; Transfer: Yes Report: 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) Reporting: ? Retention License Auth: MAB Tenure: ? Minerals Marketing Via MMCZ except Au and SML minerals Marketing on Own A/C SML- only Zimplats & Unki Gold Marketing Authorised Dealer (MoF - ex ResBank) Prospecting License (PL): Size: 300m radius from prosp. notice Tenure: 2y, non-transferable Eligible: AP or Co w/exclusive AP rep, Zim resident Report at end for conversion Claim Special Prospecting License (not in proposed amendments) Permits up to 150 claims (1Ha each), plus extra-lateral rights Tenure: 2y, non-transferable Eligible: AP or w/exclusive AP rep, Zim resident EPO: exclusive prospecting order (EEL: exclusive exploration license) Authority: MAB to President (to Minister) Size: Coal & HCs Ha; 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 MAB Report: Pgm of work 6m; End Report ZGS MAB: Mining Affairs Board; HCs: Hydrocarbons; ASM: Artisanal & Small-scale Mining

19 Regulatory Framework Government 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 Mining Concession/Lease
Minerals Governance Zimbabwe - Hybrid “free mining” & public tender regime Exploration Terrains Unknown assets Known assets Partially Known Exploration Terrain (FIFA) Exploration License (w/mining lease automaticity) Progressive Tax (e.g. APT/RRT) “Mining Charter” type conditions Delineation Terrain SMC or Auction on: Tech/Fin Capability Rent share (RRT) Back/Forward Linkages Infra development HRD & R&D, tech transfer Indigenisation, Etc... Geo-Reserve Terrain Further geo-survey: ZGS, SMC (ZMDC) or sub-contractors Risk exploration for future step-in rights. Mining Concession/Lease

21 Typical National Mineral Resource Base Competitive Tender System
FIFA (claim) System

22 Regulatory Framework The 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: Set out simple and transparent procedures for the allocation of rights, Stipulate the conduct of exploration activities, Define the transition from exploration to mining rights and the transfer of these rights, Regulate the conduct of mining, Define local content and value-addition obligations. Stipulate local skilling and technology development commitments. Guarantee security of tenure and the orderly carrying out of business, Ensure exclusivity of specified mineral rights over licensed areas.

23 Equitable and Competitive Mineral Fiscal Regime
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. 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.

24 Mineral Resource Rents
Equitable and Competitive Mineral Fiscal Regime Mineral Resource Rents Return on Investment (ROI) > costs including minimum return to effect the investment Time t Resource Rents = “luck” rents State Resource Rents = Demand > Supply: limited resources Miner = better deposit “Normal” ROI Tax Labour Inputs (purchases) Resource Rent Tax (RRT): 50% of ROI greater than Long Bond plus 7%? NO IMPACT ON MARGINAL OR AVERAGE DEPOSITS!

25 Rather capture surplus: Resource Rent Tax (RRT)
Equitable and Competitive Mineral Fiscal Regime Royalties/fees add to costs, increase the cut-off grade and constrain new mines Impact of Royalties & Fees/Levies on New Mines or Mineable Reserves Cut-off Grade with high royalties/fees/levies Grade Δ Cost Cut-off Grade Δ tons Mineable Resources Additional mines or mineable reserves Reserves Rather capture surplus: Resource Rent Tax (RRT) to fund a SWF (inter-generational) including a fiscal stabilisation fund and minerals development fund

26 Equitable and Competitive Mineral Fiscal Regime
However, the surplus declared can be dramatically reduced through Transfer Pricing Transfer Pricing PR O F I T Under-invoicing of sales Over-invoicing of costs Profit transferred to a low tax jurisdiction Inputs, Raw Materials Finance charges Assess tax self-audit, (revenue >$200mn?) Assess not accepting FDI from tax havens Labour

27 “Strategic Minerals” 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.

28 Disputes Resolution and Advisory Capacity
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.

29 Minerals Marketing 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.

30 State Minerals Development Company
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.

31 Transparent Benefits from Mining
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.

32 Indigenisation 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.

33 = quasi tax, depending on how the equity is funded
Indigenisation = 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 NOTE: The 10% community “free carry” could create future problems of rich (mining) and poor (other) communities (inequity)!

34 Facilitate wealth creators not hitch-hikers!
Indigenisation Learn from the SA BEE experience! Facilitate wealth creators not hitch-hikers! Indigenous mining & linkages investment projects Mining Industry 10-20% equity Indigenous VCF (debt & equity) This is will promote both growth AND indigenisation

35 Indigenisation: Impact on FDI
Impact of Indigenisation on New Mines or Mineable Reserves- Could restrict FDI to rich deposits only Cut-off Grade with indigenisation premium Grade Δ Risk Cut-off Grade Δ tons Mineable Resources Additional mines or mineable reserves Reserves Increases the hurdle rate (ROI) = increases cut-off grade = sterilises resources! But negligible if 51% on renewal

36 Minerals Knowledge Formation
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.

37 Minerals Knowledge Formation
Knowledge Linkages Investigate the establishment of a Minerals Skills Fund and a Minerals Technology Fund Possible Minerals Skills Fund (MSF) Structure Knowledge Fund, State, ZMDC, COMZ, Mining Industry, Donors MINERALS TECHNOLOGY FUND Research & Development Institutes Private sector tech. dev. capacity Local Universities & Colleges Funders MTF Targets Possible Minerals Technology Fund (MTF) Structure Knowledge Levy, GoZ, ZMDC, Mining Industry, Donors MINERALS SKILLS FUND Local Universities Local Colleges Local Schools Funders MSF Targets

38 An Integrated Mining Sector – Spatial Linkages
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.

39 An Integrated Mining Sector
Simplified resource-based Development Corridor Methodology Anchor mineral projects or clusters Underpin the financing of..... Trunk infrastructure (rail/road, power, gas, water, ports) which opens up the.... Development of economic potential in other high impact sectors (e.g. agriculture & agri-processing (collateral impacts) “densification” of the corridor through feeder infrastructure to service the high developmental impact collateral investment potential Identification of related up- & downstream investment opportunities (project “deepening”) Identification of related upstream infrastructure investment opportunities (project “deepening”) Problem: Cross-sectoral and Multi-state coordination!

40 Idealised DC Configuration
An Integrated Mining Sector Idealised DC Configuration Agri-node & “cluster” Anchor & “cluster” Stranded investment feeder DC logistics “catchment” “TRUNK” Infrastructure: PPP Problem feeder Problem feeder “DENSIFICATION” Feeders often need to be funded thru’ fiscus/grant Stranded investment Anchor & “cluster”

41 Similar coal corridor from Byo to Maputo?
CASE STUDY: Potential Competitive Tender of a Known Resource (not a back door deal with no price discovery) 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; Mwanesi-Beira DC New Port & SEZ Tender bid evaluation elements A low-cost national logistics corridor could catalyse widespread growth in other sectors such as agriculture & manufacturing 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) 5y, 10y, 15y, 20y HRD & R&D Bid up $/an local spend- 10% Extra infra-structure Bid up % extra capex for open access infrastructure capacity Total 100% Similar coal corridor from Byo to Maputo?

42 Power is currently the major constraint to mining/smelting growth
An Integrated Mining Sector – Spatial Linkages Power is currently the major constraint to mining/smelting growth 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)

43 An Integrated Mining Sector 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).

44 Markets: Sub-Saharan Africa & World GDP Growth
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 Artisanal and Small-Scale Mining (ASM)
ASM support “Golden Triangle” Large Scale & ASM Symbiosis? “outgrower concept” DMC pound, Regional Geologists, GML, BSM, tech manuals DMC hire-purchase pound, VCF? GML, MMCZ, (Res Bank?) “Designated ASM Zones” (DASMZ) – terrains conducive to ASM, with focussed SEA & support

47 Outcomes Matrix The impact of the minerals sector on the broad national development goals will be regularly assessed in terms of its contribution to: national revenue and foreign exchange earnings, gross fixed capital investment, the creation of inclusive sustainable indigenous employment, the provision of raw materials for downstream industries and national reconstruction, the provision of markets for local supplier industries (local content), the improvement in social and physical infrastructure, the stimulation of new economic activity through the provision of the requisite infrastructure; the development of indigenous capital and entrepreneurship, positive impacts on the environment and local communities; the development of sustainable ASM operations and communities, the improvement of mining health and safety indices, and the improvement in national knowledge infrastructure (STEM skills formation and technology transfer and development).

48 Way Forward? Ministry to amend and sign-off on “Draft Minerals Development Policy” Stakeholder consultations: Post draft on the Ministry website Road-show (public meetings) to main mining centres: Harare Bulawayo Gweru Masvingo Mutare Kadoma Chamber of Mines workshop Intra-governmental workshop Incorporation of inputs into final DRAFT Minister to present amended Minerals Development Policy to Cabinet; Initiate drafting of New Minerals Development Act to give effect to the National Minerals Development Policy; 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 you Tatenda Ngiyabonga Ke a leboga Zikomo kwamberi
Website for full report: Ministry of Mines website: Dr Paul Jourdan:

50 Full Report: “Mining Sector Policy Study”

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