The in-tray of Zimbabwe’s Minister of Mines
Winston Chitando has made the great leap, from running Mimosa Platinum Mine to superintending over the Zimbabwe government’s ministry of mines.
By Gilbert Makore
Chitando has been running Mimosa since 2007, first as managing director and from 2013 as executive chairman. His business acumen is sorely needed now that he is responsible for a critical section of the economy, and one that has been dogged by controversies and allegations of corruption.
There are a lot of things that the new minister could do but he does not have much of a runway to do everything that needs to be done before elections later in 2018.
There is investors interest, geo-surveys, production capacity, skills, energy, taxation regime, property rights, transparency and accountability issues he has to deal with as a matter of urgency. He will have to prioritise and focus more on addressing the regulatory and legacy issues while capturing as much resource rent from operating mines as possible.
If I were Chitando, this is what I would do in the next 100 days;
- Put a moratorium on new mining deals or investments until after there is clarity on the mining legal and policy framework. With the time-frame in the run up to the new elections there is inexorable pressure to demonstrate results. The country is unlikely to make good deals negotiating from such a position. In any case, no new investment will have any meaningful effect on the economy before the 2018 elections.
- Finalise the much talked of new ‘fiscal regime’ for the sector. Talk of this new fiscal regime has been ongoing for the last 2 years if not more. He must bring closure to the issue.
- Provide more clarity on the Indigenisation and Economic Empowerment Act amendments. Chitando is an industry man, he needs to reach out to that constituency and communicate the reforms around the Act. The chaotic implementation of the Act and the policy flip-flopping have dented the industry’s trust in the State. It cannot be undone by one statement by Finance Minister Patrick Chinamasa in a Budget Speech. There should also be efforts to clarify what now happens to established Community Share Ownership Trust Schemes.
- Provide clarity on the platinum export tax and beneficiation initiatives. The tax has been ominously hanging like a hangman’s noose over the platinum sector.
- Provide direction on the principal mining legislation and policy framework. Reform of the Mines and Minerals Act has suffered a lot of false starts. There was a 2007 draft and there is currently a different 2016/2017 draft. Any reforms to the principal mining legislation needs to be communicated properly and allow the industry and the community to be part of a transparent process. There is no such clarity at the moment.
- Clean up the State-Owned Enterprises (SOEs). Much of the rot in the mining sector is in SOEs such as the Zimbabwe Mining Development Corporation (ZMDC) and the Minerals Marketing Corporation of Zimbabwe (MMCZ) among others. There should be a complete overhaul of these institutions, with new boards and new demands on their reporting and accountability, cutting wasteful expenditure.
- Push for a full investigation into the whereabouts of the $15 billion former president Robert Mugabe said has been stolen. The actual figure is probably much less but this was stated by the president himself under no pressure from anybody. So this figure will not just go until there is closure on the matter. If unresolved, it will hang on any ZANU-PF government like an albatross.
- Win over the citizenry. If there is one sector that is reviled for deep seated corruption and mismanagement it is the mining sector. This is due to the heightened expectations that the government whipped up when alluvial diamonds were discovered in Marange, and the consequent failure of government to meet those expectations. Who doesn’t recall the then minister of mines, Obert Mpofu stating matter-of-factly that Zimbabwe will never beg again! Chitando must do things that demonstrate that mining will now be handled in a transparent and accountable manner. A clear minerals policy and presentation of the same at a multi-stakeholder and public conference would go a long way in doing this. A policy that commits to full and disaggregated — by project — disclosure of mining revenues.
- To the extent possible, support the RBZ in its efforts to mop up gold from artisanal and small-scale gold miners. This will include supporting monitoring efforts and assessing the impact of paying miners in bond notes, even with the export incentive, as opposed to hard currency and adapting accordingly.
- He should seriously consider removing the export incentive for mineral exports. Our mineral sector is largely disarticulated from the rest of the industry therefore miners are still going to export. The demand elasticity of most mineral commodities is not highly variable.
- Host an investor’s conference (or several in the right foreign capitals!) only after finalising the minerals development policy and the reform the Mines and Minerals Act. Prostrating ourselves in foreign capitals is not something we aspire to but Zimbabwe does need foreign capital for our large-scale mining industry. This may happen post the first 100 day cycle.
- There are a lot of property rights issues that need to be addressed – the two that possibly need urgent attention is the bundling up of companies operating in Marange into the Zimbabwe Consolidated Diamond Company; and the involuntary ceding of land held by Zimplats to the government. For all these companies’ faults and our failure to negotiate good terms and manage our resources well, we must demonstrate that we respect property rights and abide by our laws. Gangsterism must be a thing of the past.
- Work on models that ensure that mines always have enough energy. Consistent production has repeatedly been compromised by electricity supply challenges. Mines must be prioritised and models where they secure they own power supply through the national grid should be explored.
- Get a hold of what is happening at Gache Gache. What is happening there is a disgrace and does not encourage private investment.
Gilbert Makore works on mining, oil and gas. His interest is in contributing to ensuring that natural resources optimally benefit African citizens. He has previously worked for the Zimbabwe Environmental Law Association and Publish What You Pay.