Small scale miners are unhappy with the fuel import fees being charged by the Zimbabwe Energy Regulatory Authority (ZERA) claiming they are too high and this is likely to kill business. This came out of the miners’ forum which was recently held in Bulawayo.
As a measure to improve fuel supply in the country, the government decided to allow big companies to import their own fuel. In all fairness, this move is desirable as it allows companies to procure according to their demand and it also eases pressure on fuel retailers. However, according to small scale miners, the import fees are prohibitive and will effectively kick them out of business. Zimbabwe Miners Federation (ZMF) President Henrietta Rushwaya said, “Government has allowed miners to import fuel, but the application fees to register with ZERA are too high, which is RTGS$23 000. Please, note that fuel shortages will result in fewer gold deliveries to Fidelity Printers and Refiners (FPR) because of operation stoppages. She added, “As ZMF, we also feel that based on our 2018 gold output statistics, 2019 might not be a lucrative year for Fidelity, nor for ZMF, nor for the nation at large, as it was in 2018. This is mostly caused by an erratic fuel supply and this has affected mining operations, especially for a sector which uses equipment that relies mostly on diesel.” Rushwaya advised that a fuel facility is being worked out between ZMF and Metbank though.
To fully understand the effects of poor gold production, we need to put things into perspective. Gold is the largest foreign currency earner for the country. It clocked US$1.6 billion in export proceeds in 2018. Tobacco was a distant second with $900 million. Small scale miners produced the bulk of the gold delivered to FPR so it would be prudent to support them as much as possible so that they produce more. They normally use diesel for their machinery, generators and compressors. Without this, they are as good as dead. As such, this is a group of exporters which we need to keep happy at all costs.
Other challenges
Fuel is not the only challenge being faced by small scale miners though. The Reserve Bank of Zimbabwe (RBZ) surprisingly reduced their foreign currency retention rate from 55% to 50%. The fear is that this will leave them with inadequate foreign currency to cater for basic operating costs. Gold deliveries which used to average 500kg per week dropped drastically to 20kg per week soon after the monetary policy announcement. Arbitrage through side marketing and under declaration cannot be ruled out as small-scale miners try to ensure survival. They need foreign currency to procure certain consumables such as explosives. Without it, they are doomed.
Lack of support in the form of funding and equipment is another long-standing problem. The government has tried to deal with this by offering loan facilities and equipment subsidies but accusations that only the politically connected benefit are rife and progress is slow.
Surely, we cannot wait until the end of the year to see that we are producing less than we should. Lasting interventions are needed immediately so that small scale miners are motivated to produce more and sell through the official channels.
