An ear to the ground: artisanal and small-scale gold mining in the new dispensation
08 February 2017
Mining has played an economic shock absorber role, never mind the squandering of Marange alluvial diamond wealth. The Artisanal and Small-Scale Gold (ASGM) sector which has recently eclipsed production of large scale miners has been instrumental, not only in earning the country much needed foreign currency, but creating employment and income generating opportunities for over half a million people directly.
A compelling case is made for ASGM as a front door way of empowering poor but resource rich communities. Certainly, ASGM has its ugly side. Negative externalities like damage to the environment, disrespect for property rights, violence, alcoholism, spread of diseases, injuries and deaths, all deserves to be mitigated to better account for ASGM benefits.
Repeated calls have been made by the new government that Zimbabwe is now open for business, what opportunities and challenges does this policy direction mean to ASGM sector? A new Minister of Mines with strong mining industry background is now in charge, will he be pro large-scale mining or be considerate to ASGM? from the architects of command agriculture, is command mining on the cards? How government is fairing on curbing illicit financial flows with ASGM production eclipsing large scale miners? And given the unsustainable nature of ASGM, is diversification of rural economies a priority? The following ten points helps us to have a pulse feel of ASGM in the new dispensation.
Foreign direct investment and ASGM
Government has made attraction of Foreign Direct Investment (FDI) in the mining sector a priority in its quest to enhance economic revival. Attraction of FDI in the mining sector is closely linked with large scale investors who may view growth of ASGM as a threat. An expression of interest has been published by Ministry of Mines which include investments into the Zimbabwe Mining Development Corporation CZMDC)’s gold assets, Jena Gold Mine in Kwekwe and Evington in Chegutu. Taking advantage of ZMDC’s moribund operations and vast idle claims, ASGM is thriving in these areas. Artisanal miners have pinned hope on government to reallocate some of the unutilised gold claims owned by ZMDC, including other large-scale miners.
There is an inherent risk that government’s inclination to attract FDI may lead to the displacement of ASGM. If not handled well this can cause conflict and threaten a way of livelihood for many people residing in rural areas. With the impeding drought this year, predictably, ASGM will attract more players in rural areas.
New Minister of Mines with Large Scale Mining DNA
To make an impression on investors, a new Minister of Mines with a solid mining industry background was appointed. Honourable Minister Winston Chitando is a former executive chairman of Mimosa platinum mine, equally owned by Implats and Sibanye, both listed at the Johannesburg stock exchange. So, the Minister may have a soft spot for large scale mining operations but he must avoid playing “step mother” to the ASGM sector. Without a doubt, large scale miners offer less administrative burden when compared to ASGM.
That said, ASGM is not a matter of impressive macro-economic indicators disconnected from livelihood of many people residing in resource rich areas. When large scale miners exxperience windfall revenues, evidence of increased community purchasing power is barely notoceable. Along with agriculture, ASGM is the nerve center for rural economies who are susceptible to climate change risks, droughts and floods.
It is noteworthy to say the Mimosa platinum mine has been exemplary though their Corporate Social Investments (CSIs) by providing equipment support to ASGM in Zvishavane and Mberengwa. In 2015, Mimosa donated compressors, jack hammers and a vehicle to Zvishavane- Mberengwa small scale miners’ association to the tune of $150,000. Hopefully, Chitando who was at the helm of Mimosa during that time can use his newly acquired influence to spur greater cooperation between large scale miners and ASGM.
Softening of indigenous laws in the mining sector
The indigenisation requirement for ceding at 51% equity to indigenous partners is set to apply only to platinum and diamond sectors. Without considering its effectiveness on the ground, ideally, indigenisation seemed to have a better package for empowering resource rich communities through Community Share Ownership Trusts (CSOTs). Mining companies were required to cede 10% equity to communities around mining areas. However, only two out of sixty-one established CSOTs were given share certificates – Gwanda and Umguza rural districts. According to the National Indigenisation and Economic Empowerment Board (NIEEB), $39 million has been paid to CSOTs as seed capital. 3 platinum mines anchor contributions with a combined total contribution close to $30 million,
Restricting indigenisation to platinum and diamond sectors leaves government with pressure to come up with empowerment strategies for resource rich communities. There is no need to reinvent the wheel. Formalising ASGM is a front door way to empower directly over half a million people who are engaged in the sector. It would be highly regrettable for government, after scrapping softening of indigenous laws, to side step ASGM in its policy interventions in the mining sector. Already small-scale miners in gold and chrome sectors are being squeezed out mainly by Chinese nationals. In Bubi, the Chinese owned custom milling services have taken business away from indigenous millers. Government must deliberate consider limiting foreign participation in the ASGM sector and help the players to acquire appropriate technologies.
African Mining Vision and ASGM
Government has shown willingness to reform. Although it has its own faulty lines, the African Mining Vision (AMV) agreed to by the African head of states in 2009 offers a framework that countries can customise. AMV recognise ASGM as an indispensable sector, which must co-exist with large scale miners because some deposits are not economically viable for large scale mining. Furthermore, ASGM can be an integral part of rural economies as it can potentially stimulate growth of within and beyond ASGM supply chain opportunities.
As government moves to reform the archaic and colonial Mines and Minerals Act, it is important recognise artisanal mining through a special permit which enables easy of doing business for poor communities whose livelihoods have been criminalised. The Ministry must leverage of the work done by the mining Technical Working Group (TWG) on ease of doing business which came up with proposed terms and conditions for a special mining permit for artisanal mining.
Curbing Illicit Financial Flows Linked with ASGM
Informality and economic lucrativeness have conspired to make ASGM susceptible to illicit financial flows (IFFs). To stifle side marketing of gold, government must address cash shortages which make it difficult for artisanal miners to access the 30% payment through bank transfer or bond notes. The other 70% payment is made in cash – US dollars. Broadly, foreign currency shortage has elevated the significance of gold as a substitute currency to US dollars.
Businesses resort to buying gold which is highly liquid in countries like South Africa to finance importation of goods and services when they fail to access foreign currency. Although production of ASGM has outstripped large scale producers, government must not be blind folded by this success, a lot more must be done to curb syphoning of gold from the official market
Claim Ownership Disputes and Mining cadastre
High levels of corruption and outdated mining title management system have triggered numerous claim ownership disputes. This is affecting ASGM production. Prominent women miners in Matebeleland South have stopped mining for 2-3 years because of claim ownership disputes. Normally, ownership disputes are tied to rewarding mines. Government must urgently prioritise resources for a computerised and open title management system to enable transparency and accountability.
From the architects of command agriculture, is command mining on its way
For a long time, players in ASGM have been envious of government’s mechanisation and input support to agriculture. Now that Mnangagwa is the President, the champion of command agriculture, a man deemed to have a soft spot for ASGM, expectations have ballooned for a command mining scheme. President Mnangagwa has strong roots in Kwekwe, a town whose economy is pivoted on ASGM.
Interestingly, Zimbabwe Artisanal and Small Scale for Sustainable Mining (ZASMC) president, Engineer Murove, has compiled a blue print on command mining. Expectations are that government will roll out mechanisation and input support to the ASGM sector like command agriculture to boost gold production, ease the foreign currency shortages, create employment and stimulate community enterprise development.
Widely known for its poor environmental management practice, the regulators have not been helping matters either through imposing burdensome Environment Impact Assessments (EIAs) to ASGM. It is heartening to note that the Environment Management Agency (EMA) is moving in the positive direction to enhance formalisation of ASGM through tailor made environmental regulations. Lessons can be learnt from Tanzania, a country with simplified environmental regulations for ASGM.
Technical capacity building for ASGM
Learning institutions like School of Mines, University of Zimbabwe and Midlands State University have commendable programmes for equipping players in the ASGM sector with skills to improve mining and mineral processing methods. Because of the huge demand, the is need for civil society players to innovate in order to address the yawning skills gap particularly for women miners. For example,the Zimbabwe Environmental Law Association (ZELA) is in the process of setting up a professional club for women in mining which will be carrying outreach visits to women miners from time to time.
ASGM is not a sustainable economic activity
By nature, minerals are finite resources. Hence economic gains from mining, ASGM included are not sustainable unless revenue generated from mining is reinvested into productive sectors of the economy like agriculture and manufacturing. It becomes fundamental to come to encourage innovative savings schemes and community enterprise development exploiting both ASGM supply chain opportunities and diversification of rural economic activities.
Some positives can be seen already. In Shurugwi, a small-scale miner has diversified into hotel and catering services. It is common for players in the ASGM invest in cattle and farming activities. Largely, gold producing areas are famed for consumptive expenditure, luxury cars and alcohol. Wealth is often squandered. Stakeholders, government, civil society and business must join hands with players in the ASGM sector to promote a sector which is an integral part of rural economies as envisages by the AMV.
Formalising ASGM presents great opportunities for government to comply with the constitutional requirement that mechanisms must be put in place to ensure communities benefit from resources in their areas. This becomes more pressing considering that government has moved to soften indigenisation framework for all minerals, except for platinum and diamond.
Government must break away from urgently from colonial Mines and Minerals Act and recognise artisanal mining through a special permit as recommended by the Mining TWG on ease of doing business reforms. Since some mineral deposits are not viable for large scale mining, there is room for having ASGM as an integral part of the mining sector as encouraged by AMV.
Of course, formalising ASGM goes beyond legalistic measures, that is why government must be at the fore front of promoting mechanisation of the ASGM sector and provision of scarce finance. We must not lose sight though that ASGM is not sustainable, so initiatives to enable diversification of rural economies must be prioritised soon rather than later.