State of Play in Artisanal, Small-Scale and Large-Scale Mining Areas

Compiled by Shamiso Mtisi, Joyce Nyamukunda, Nobuhle Mabhikwa, Joshua Machinga and Paul Matshona

1.0          Introduction

Over the past four months, we have waited for COVID-19 to abate. The lockdown was indefinitely extended, with some relaxations in June 2020. It’s now the end of July, the cold season, and the number of COVID-19 cases in Zimbabwe significantly picked up with more than 2 500 cases and 34 deaths confirmed as of July 26. While word on the street says Government is deliberately raising numbers and declared a curfew for political reasons to curb planned July 31, Anti-Corruption Demonstrations being planned by activists and opposition political parties, it is highly likely that the lockdown relaxation in May and June, in addition to high numbers of infected returning residents contributed to the significant increase of confirmed cases.  However, the impact of COVID-19 on the historically fragile Zimbabwean economy has been huge.

This 4th edition and series of the COVID-19: MINING SECTOR AND COMMUNITIES’ SITUATIONAL REPORT (SIT-REP) looks at how mining in Zimbabwe is being affected by the pandemic and what the players in the sector are doing in response to the pandemic. The report covers both large scale and small-scale mining. These include diamonds, gold, chrome, and platinum.

In keeping with our organisational approach, we gathered information from more than 200 ZELA affiliated community monitors, media reports, and public statements by Government officials and corporates. In all this, we adhere to our Safeguarding Policies and Principles of doing no harm to our communities and stakeholders. We encourage them to socially and physically distance- to stay safe by staying at home and not put themselves at risk of contracting or spreading COVID-19. They collect information using their own social media contacts and networks at community level, which will be triangulated by ZELA.

2.0          Government policy and legislative developments  

On the 17th of May 2020, the Government extended the COVID-19 lockdown indefinitely[1]. Mid May, cases of COVID-19 infections increased at a very fast rate[2]. This is partly because of the increased number of residents returning from abroad. Due to the rising number Government passed Statutory Instrument 174 of 2020, Public Health COVID-19 Prevention, Containment, and Treatment) National Lockdown Amendment Order with the effect of putting in place a Curfew to limit business hours of trade and movement of people and vehicles on the 21st of July 2020. Only registered businesses are allowed to operate from 8 am to 3 pm, while a curfew for movement and vehicles is from 6 pm to 6 am, except those involved in the provision of essential services including the mining sector.  

Despite the increase in the number of cases, different sectors are still operating and are required to put in place measures such as testing of employees before they resume business, testing of temperature, and provision of Personal Protective Equipment for employees[3]. Over the past months, several employers faced challenges as testing centres did not have adequate testing kits[4]. Private health centres have limited health equipment and resources. This saw some businesses opening without complying with the testing of employees’ regulation while others continued with the lockdown. 

2.1          Access to the Economic Rescue Package for Miners

The President of Zimbabwe unveiled a ZWL$18 billion Economic Recovery and Stimulus Package aimed at reinvigorating the economy and providing relief to individuals, families, small businesses and industries impacted by the economic slowdown caused by the Coronavirus pandemic and the attendant response measures implemented by the government to control the health crisis[5]. The mining sector was allocated ZWL$1 billion. This is a credit facility for the gold sector targeting both large- and small-scale miners. Part of the money was set to be available in foreign currency. Promised support to the sector included fuel and power to ensure production is not disrupted; resuscitation of closed gold mines by designating them special economic zones; reduction of fees and annual rentals to encourage investments in exploration; speeding up the implementation of computerised Cadastre System to create confidence in the management of mining title and strengthen the security of tenure to promote investment in the mining sector activities.

However, miners in different parts of the country are yet to benefit from the recovery and stimulus package. However, ever since the pandemic started, miners have not experienced power cuts. To benefit from the economic recovery and stimulus package, Zimbabwe Miners Federation (ZMF) submitted their proposed plan on how the money should be used and disbursed to the gold miners. Their proposal tried to address the challenges from previous programs and packages such as the RBZ 200 million scheme for miners which only benefited 307 people. In the current proposal, ZMF proposed buying of equipment instead of giving cash to the miners. Equipment includes basic machinery such as compressors, water pumps, and generators among others. Fuel, explosives, and other accessories will also be included so that it becomes a complete package. This is also a way to promote and improve mechanisation in the ASM sector.

2.1          Cadastre system

The Ministry of Mines and Mining Development reported to the Parliamentary Committee on Mines on the 23rd of July 2020 that by June 2020 Government had released funds for the purchase of hardware for the Cadastre system. The Ministry has negotiated with the Ministry of Higher and Tertiary Education to assist in the development of the Cadastre system at a much cheaper cost. A Committee has reportedly been formed comprising the Ministry of Mines and Ministry of Higher Education to spearhead the establishment of the Cadastre system.

2.3          Large number of Mining Licences Applications

Over the year the Ministry of Mines has been issuing 2 500 mining titles per year. However, by July 2020 there has been a massive number of applications for mining licences to the Ministry of Mines. A large number of applications are straining the Ministry since it does not have adequate resources-human resources and equipment to process mining titles. This has affected the speed of processing mining titles.

2.4          Use It or Lose It Principle

The Ministry of Mines is processing 213 mining concessions under the Use it or lose it principle-with 147 at an advanced stage under Phase 1 of the use it or lose it principle. According to the Ministry of Mines under this, some concessions will be repossessed and redistributed. Forfeiture of all mining titles with overdue fees has been ongoing and 21 000 hectares have so far been covered under the exercise.

2.5          Gold pricing developments and changes

Fidelity Printers and Refiners (FPR) announced a new gold trading framework on Tuesday, 26 May 2020. The measures related to different gold payment arrangements for deliveries from Artisanal and Small-Scale Gold Mining (ASGM) and Large-Scale Mining (LSM). With effect from 26 May 2020, FPR was paying a flat fee of US$45 per gram of gold from ASGM. Gold deliveries from LSM were being paid 80% in US$ transferred to the relevant company’s Nostro bank account and the remaining 20% being liquidated to local ZW$ at the prevailing official exchange rate.  Large gold buyers were required to produce a minimum of 50kgs of gold per month to get a gold buying license from FPR. Small gold buyers were to be licensed as agents for FPR with attendant terms and conditions which were not specified. Responding to these announcements by FPR, ZMF issued a statement raising concerns that FPR deviated from its promise for transparency in gold pricing hinged on what is obtained from the international market, London Bullion Market Association rates. Therefore, the fixed rate of US$45 was not responsive to gold price movements on the international market. On the day that FPR announced the gold trading measures, the international market offered $54.8 per gram of gold. Thus, FPR was paying 17.88% less than what was being offered on the international market. The framework was announced amidst cash and payment challenges to the miners[6]. FPR was struggling to pay miners due to the limited cash flows caused by flight movement restrictions because of COVID19.   While gold has taken some hit as a result of the impact of COVID19 on the commodity supply and demand chain, its price has risen as investors sought a haven due to the low returns in US$ denominated securities. According to Bloomberg data, gold has risen by 5.3% so far this year and may go higher still.

However, in July 2020, Fidelity Printers quickly abandoned the fixed gold buying rate of $45 per gram for ASM opting for floating world market prices. This is what many gold miners have been calling for.

2.6          Licencing of Large-scale Gold buyers

Freda Rebecca Gold mine, a subsidiary of Landela investments, has entered the gold buying market after being licenced by Fidelity Printers and Refinery to buy directly from the small-scale miners.  FPR has licenced them to purchase gold as a way of reducing leakages in the sector. Freda was licenced on condition that it will buy at the same prices as FPR. Banks such as ZB have been reported as new gold buyers who had obtained the licence from FPR[7].

Measures and incentives being put by the governmentmay improve and increase production. It is not clear if these measures will help in realisation of the 12 billion mining economy[8]. Production levels may increase but there is a risk of illicit trading of gold due to the unfavourable payment terms by FPR. Other gold mining companies such as RioZim have stopped operations due to delays in payments for deliveries to the country’s sole buyer of bullion, which left the company unable to meet its operational expenditures[9]. RioZim said it was owed $2.46 million and 65.48 million Zimbabwe dollars ($2.6 million) by Fidelity for gold deliveries. The shortage of foreign currency and unpleasant rates by fidelity may be a hindrance to the 12 billion mining economy.

2.7          Murky Gold Buying Licencing System

FPR gives gold-buying licenses to individuals and companies as long as they meet the criteria as required[10]. To ease the challenges by artisanal small-scale miners, in 2018, FPR gave 21 small-scale gold-buying licences as part of efforts to plug in gold leakages particularly in the small scale sector[11]. The buyers are supposed to operate across the country’s eight mining districts (provinces) and target miners who cannot meet the 0,5 grams minimum at which FPR accepts deliveries. In a tweet that was generated by Hon T. Mliswa, he pointed out that, “There are 29 individuals and 7 companies with gold buying licenses in the country. He went on to mention that many of them are shady buyers. FPR does not carry out adequate due diligence on gold buying agents. There were also allegations that most of the licenced gold buying agents are former Reserve Bank of Zimbabwe employees. The gold sector has become murky and has cartels. Early this year, a Beneficial Ownership register was put in place under the revised Companies Act. This is a key tool to address the ownership issues of the companies who are buying licences and to ascertain the shady deals in the gold sector. Unfortunately, the register is not a public document and this prevents the public, civil society organisations, mining communities, and the media from scrutinising information and holding to account people who hide corruptly behind companies to plunder national resources[12].

3.0          Situation at Large scale Gold, Platinum, Coal, Chrome and diamond Mining Companies

3.1          Gold sector

Many large-scale gold mining companies have been affected by the impacts of Covid-19 and the economic situation in the country. For example, RioZim had to suspend operations following failure to meet operating costs.  RioZim is Zimbabwe’s biggest gold miner and Zimbabwe Stock Exchange-listed entity[13]. The level of earnings was not enough to cover operating expenses. These include imported power and a restless workforce demanding that wages be paid in foreign currency. Due to the poor gold pricing structure adopted by FPR many gold miners find it is difficult to continue operating. RioZim suspended operations at Cam and Motor Mine, Dalny, and at Renco Mine after it ran out of money to import cyanide, activated carbon, explosives, as well as spares for the repair of equipment among other items.

While Blanket mine in March upped its production and produced about 14,233 ounces of gold up from 11,948 as reported in our last 3rd series of the situational report, in June 2020 Caledonia applied for delisting on the Toronto Stock Exchange due to cost and low trading activity.  Since the company’s shares were listed on the NYSE in 2017, trading on that market has become increasingly dominant, and it now provides the most liquid market for Caledonia’s shares. Accordingly, the company believes that the financial and administrative costs associated with maintaining its listing on the TSX are no longer justified[14]. Caledonia Mining’s primary asset is the Blanket Mine in Zimbabwe.

3.2          Chrome sector

Although the mining industry was given a reprieve at the start of the Covid-19 induced national lockdown to continue operating upon meeting some required conditions, the chrome sector which had been experiencing operational challenges way before the deadly global pandemic struck, had its fortunes taking a nosedive after its stainless steel making markets in Europe and Asia decreased operations. The Ferrochrome company in Zimbabwe ZIMASCO will not be opening any time soon. The management is going to continue monitoring demand trends before making informed decisions as to when to resume operation[15]. At the end of March 2020, Zimasco temporarily halted its smelting and related mining operations in response to weak global demand and resultant low prices for ferrochrome, which made continued production unviable. The weak demand was further exacerbated by the negative impact of the Covid-19 global pandemic.

3.3          Diamond sector

Zimbabwe Consolidated Diamond Company (ZCDC) is operating and as of last month, the production levels had been normal. ZCDC is having financial challenges with salary arrears from February 2020[16]. Service providers to the company such as the mining communities who provide chickens, beef, and vegetables are owed money by the company as well. Due to fuel shortages production has reduced for the past 2 weeks. It is reported that the company has about 300 000 carats of diamonds in stock which were meant to be auctioned in April 2020[17]. All these plans were disrupted with the COVID19 pandemic and the diamond market is also on a recession.

4.0          New investments in the mining sector

4.1          Sengwa Coal Plant Project: Despite COVID19, Government and private sector players have been announcing new investments in the mining sector. Covid-19 could not stop such announcements. For example, the Sengwa Coal Plant Project was reported to be ongoing. After years of trying to take off since 1990 because of  lack of funding, funds have become available in such a difficult and trying time of COVID19. Rio- Energy Ltd, a subsidiary of the Zimbabwe Stock Exchange (ZSE) listed RioZim is at an advanced stage with plans of constructing a US$ 3 Billion thermal power plant in Sengwa, Gokwe District, with financial assistance from China Gezhouba Group Corporation[18]. The power plant at Sengwa will be constructed in four phases of about 700 megawatts each, bringing the total capacity of the thermal plant to 2,800 megawatts[19]. The activities that have already been completed to pave way for the construction of thermal plans include; full design and feasibility of the power station as well as the design of power evacuation lines, a coal mining plan, and fuel coal delivery to the station[20]. The thermal power plant is expected to produce electricity for both local consumption and exportation[21]. There is evidence that the commencement of the Sengwa power plant is now imminent, with precise indications that construction will start this year. On the one hand, the project may benefit the country considering that Zimbabwe faces electricity generation problems. On the other hand, the proposed project may come with environmental and social cost costs which cannot go unchallenged. The project is set to use a globally condemned fossil fuel technology.

4.2          Karo Resources: Karo Resources’ investment is in four parts. Construction of the plant is the first stage, although this was delayed due to COVID-19. 30 000 metres of drilling has been done and all technical work has been undertaken.

4.3          Alrosa: Alrosa has signed mining and exploration agreements with ZCDC. Alrosa wants to go for greenfield projects with Kimberlites and has expressed interest in Malipati in Masvingo Provinces and Maitengwe in Matabeleland North. Alrosa appears to be avoiding the bad image of Marange diamonds and the bad reputational issues of Marange on human rights, environment, and community demands and lack of transparency and accountability. Alrosa has indicated that it intends to apply its internal and international best practices and policies on sustainability, corporate social responsibility, and business and human rights standards, including the ALROSA ALLIANCE Guidelines on Responsible business practices.

5.0          Artisanal and Small-Scale Mining Sector and COVID-19

5.1          The Plight of Chrome miners: Small-Scale Chrome miners in the country have shared concerns on how they are facing challenges to access markets for their chrome. In Zimbabwe, the Minerals Marketing Corporation of Zimbabwe (MMCZ) is responsible for price control, although it is the buyers who usually decide the price as they can offer. The Chinese are the main buyers of chrome in Zimbabwe. As a result of the pandemic, borders have been closed and no buyers have been able to buy the chrome. This has left chrome small-scale miners stuck with the ore which can be easily stolen by criminals in the sector.  Chrome prices are at relatively low levels and it is difficult to see how chrome producers will benefit. Many ferrochrome producers and international markets suspended operations.

5.2          Levels of production at ASM mines– Production of gold by ASM miners has been low. The low production is being attributed to several factors.  Miners in Bubi attributed the limited workforce as one of the main reasons why production has been low. Many workers failed to come back to work from rural homes because of the strict traveling regulations currently being implemented in the country. As a result of the regulation, some miners are still working with skeletal staff despite the downgrade to level 2 lockdown. In Gwanda the availability of equipment has affected the level of production, delayed payments for gold by FPR has resulted in miners facing challenges with timeous procurement or hiring of equipment needed for production. Cash availability is a major hindrance to mining operations in the ASM gold sector. In addition, the 8 am – 3 pm curfew in place has affected their production as they are not utilising the 24hr day like they used to before COVID. While many miners have complained of low production some ASM miners are experiencing improved production attributed to the improved availability of electricity that allows them to run their equipment the entire day.

5.3          Proposal for Establishment of More Gold Smelting Centres

The Ministry of Mines organised a field visit to gold centres around the country with local investors in June 2020. Many players in the mining sector have been calling for the establishment of a gold smelting financing structure for the establishment of micro-gold smelters. The proposal includes enticing Pension and Insurance Funds to invest in establishing gold smelting centres. Specific legislation can be passed to require pension funds to invest in the gold sector. Pension Funds should not waste funds in the non-productive sector.

5.4          Marketing – The ever-changing gold pricing structure adopted by FPR distresses the ASM miners.  ASM miners accepted the fixed pricing model for gold at $45 per gram, with mixed feelings. Some ASM miners initially thought it was a good small step forward, but many of the key ASM miners dismissed it and said the fixed price offered was not competitive as compared to the Parallel market which offered higher rates and paid cash. The FPR price was only 80% of the world market price. Many ASM miners indicated that FPR takes long to pay miners. This had left miners in doubt of their service and forcing some to sell their gold to the parallel market. However, FPR has liberalised its gold buying system by floating the gold price according to global gold prices. This was welcome by many ASM miners.

5.5          Vulnerable groups in the ASM sector during COVID19: The vulnerability of the marginalised groups in the ASM has been magnified by the pandemic. Women in the ASM sector shared information on how security is now an issue of concern for them. As many cannot hire security personnel, they are left vulnerable to criminal elements.  As a result of reduced production in many ASM mines, women now find it hard to provide for their families like they used to do before. The prices for basic commodities have skyrocketed and are now too expensive for many, therefore affecting their living standards.

Operations of people with disabilities (PWD) in the ASM sector have been crippled by the pandemic as their movement is affected. The disruption in operations has resulted in the reduction of their gold operations, and in turn low-income generation. In Zvishavane it was noted that due to incapacitation some claims belonging to PWD have been invaded by other people and some have lost their workers since there was little or no production on claims owned by PWD. Further, information dissemination on COVID-19 in the sector did not put in place appropriate measures for the blind and the deaf. The youth in mining communities have not been spared by the pandemic. The majority of the workforce in the ASM sector is the youth. With the scaling down of operations in the sector, many lost their jobs leaving many without any source of income to support their families. Many of the youth with tributary agreements have not been able to work on their tributes. Those with claims cannot afford security leaving them vulnerable.

5.6          Increase in Machete Gangs and Criminals

               With many jobs and sources of income beingdisrupted and the high costs of basic commodities,manypeople are increasingly moving into the ASM gold sector for the quick money they can get. Many start mining without license as required by the law,  The Ministry of Mines has confirmed the slow processing of mining licences in light of the high number of applications in 2020. A series of machete violence cases have been reported in June and July 2020. In Zvishavane, one man was injured following a gold rush. In Matobo at Nugget Mine a machete gang violence case was reported. Reports of the gang invasions were also recorded in Maphisa, Makwe, and Mvana with criminals and gold gangs escaping with cash, digital scales, and gold ore. Machete violence incidents have been recorded in a number of mines in Bubi where the criminal gangs managed to get away with the gold ore. In Gwanda Machete gangs’ invasions have been reported at Vhovha mine where they assaulted and injured several miners and got away with gold ore. The police were able to arrest the gang leader after he was handed over to police by the miners who tracked him down to Gwanda.   

5.7          Law enforcement – in an effort to enforce the COVID19 regulations, soldiers were reported to be raiding artisanal and small scale mines, while police have been arresting and closing some miners in cases where miners were not complying with the COVID19 regulations. At the time of compilation of this edition in Matabeleland South 145 ASM miners were arrested in Gwanda while 115 were arrested in Bulilimangwe.  During a recent Parliamentary Committee on Mines meeting in Mutare (23 July 2020) a representative of the Zimbabwe Miners Federation (ZMF) informed parliamentarians that many artisanal and small-scale miners are being arrested, but gold mining activities go on even at mid-night in the ASM sector. ZMF has been calling for formalisation of the Artisanal mining to enable the miners to operate within the law.

5.8          Mining Claim disputes:  Claim disputes in the ASM sector have been attributed to the use of the archaic manual claim allocation and mapping system in Zimbabwe. The use of the manual system has resulted in claim disputes with some claims being double pegged or boundaries overlapping. The disputes have resulted in violence. A case was recorded in Penhalonga. A gold miner allegedly hired bouncers to rob a rival of gold ore worth over USD$2 500 over a mining boundary dispute. 

5.9          COVID-19 response integrated into SHE practises- in an effort to improve the SHE practices in Zimbabwe and reduce the number of infections and deaths in the ASM sector, many mine owners have integrated COVID-19 responses in their SHE plans through the procurement and provision of masks, practicing social distancing and ensuring there are clean water sources for the workers. In addition, some miners hold safety and health talks with miners for every shift. The safety briefings are based on WHO guidelines on COVID-19.

Stay Safe, Stop the Spread, Save Lives

Published by: Zimbabwe Environmental Law Association (ZELA), 26B Seke Road, Hatfield, Harare; @ZELA_Infor, Zimbabwe Environmental Law Association

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