ZIMBABWE needs to adopt new and modern exploration techniques used in the developed world, to improve and capacitate the country’s mining sector, a mining expert has said.
BY KUDZAI CHIMHANGWA – The Standard
The country has been using “ancient” data from old topographical maps which were done before independence in 1980.
Mineral exploration is the process of finding commercially viable ores to mine and is a much more rigorous, organised and specialised form of mineral prospecting.
Zimbabwe School of Mines lecturer, Tamani Moyo, said opportunities for using modern exploration techniques such as high-resolution geophysics and geochemistry have not been used to greater extents in the country.
He however, said the country does not have a comprehensive mineral policy despite its heavy dependency on the minerals industry since colonial rule.
“Although policy thrusts are attempted within the [Mines and Minerals] Act, a real drafted policy document, addressing salient issues mapping the direction of the mineral development, is long overdue. Such policies will facilitate marketing of the country, as they will stipulate the intent and goals in the development of the sector,” he said.
Owing to country risk perceptions and unpredictable commodity prices on international markets, a number of mining companies have been scaling down operations and strictly focusing on extracting high grade ore.
Moyo said government resumed processing of exploration licences at the beginning of 2010 as they were last processed in 2003.
But the challenge is compounded by increased licence fees as claim holding costs in Zimbabwe recently increased by over
African Consolidated Resources (ACR), for example, as part of its 2012 strategy, is considering projects in the country that require continued funding and what needs to be reduced or abandoned.
The company plans to hold on to its Gadzema claims in Mashonaland West province, not withstanding the increased cost of holding them.
In mining, beneficiation is defined as a variety of processes by which extracted ore from mining is separated into mineral and gangue (commercially valueless material surrounding the ore).
Government remains keen to see minerals beneficiated locally as the bulk of mineral production is exported in unprocessed or semi-processed form.
However, the government argues that mining companies should also contribute towards the establishment of value addition industries.
A player in the mining sector, who spoke on condition of anonymity, said a number of mining companies were scaling down operations despite the government demanding more revenue from them.
“Besides the high costs of exploration and bringing the mineral ore to the surface, it isn’t our core business to do beneficiation. That’s a very different industry with its own costs and expertise altogether,” he said.
He added that the high costs of further exploration to access mineral ore would lead to companies only focusing on high grade and accessible ore in order to make a return on investment.
According to the government, diamond output was largely subdued during the first six months of 2013 at 5,9 million carats, weighed down by the gradual transition from alluvial diamond mining, to conglomerates which are expensive to extract.
It is understood that had adequate exploration to determine diamond sources been a priority for both government and diamond mining companies, alluvial diamonds scenario would not have eroded as quickly.
In his 2014 Budget, Finance minister, Patrick Chinamasa expressed the importance of geologic surveys, but acknowledged that the process would take long.
He said the mining sector was initially projected to grow by 17,1% in 2013, which has however, been revised downwards to 6,5% owing to low exploration, lack of capital and weakening commodity prices on the international markets.
“Government has already emphasised that the contribution of the mining sector to the fiscus is minimal, compared to other countries in the region,” said Chinamasa. “This is exacerbated by the generous deduction of royalties and other numerous expenses incurred in the extraction of minerals.”
In a bid to enhance the contribution of mineral resources to the fiscus, the minister effectively disallowed royalty as a deductible expense against taxable income with effect from January 1 2014.
The mining sector contributes 4% to the country’s gross domestic product and currently accounts for over 50% of the country’s exports.
The major players in the sector are Rio Tinto’s Murowa Diamonds, Unki, Mimosa, Zimplats, Mwana Africa, Metallon, Sinosteel, and the Zimbabwe Mining Development Corporation, among others.