Maravi

(HERALD) ‘Liberalise minerals marketing’

COMMENT - As neoliberal ideology is turning the global economy into a wasteland, the Second Great Depression, the World Bank is still insisting that liberalising economies is the way to go. Zimbabwe should keep the economy firmly in the government's hands, because the economy belongs to the Zimbabwean people, not foreign corporations.

‘Liberalise minerals marketing’
By Costa Mano

A World Bank team that visited Zimbabwe in June on a Mining Sector Initial Assessment Mission has called for the liberalisation of the country’s minerals marketing and a review of the role played by the Minerals Marketing Corporation of Zimbabwe in marketing the country’s minerals.

The mission, led by Bryan Land, a senior mining specialist of the oil, gas and mining policy unit, was in the country to carry out an initial assessment of challenges faced in reviving the mining sector and the possible need for technical assistance.

As part of the assessment, the mission met the heads and senior officials of the Ministry of Finance, Ministry of Mines and Mining Development, MMCZ, Environmental Management Agency and the Chamber of Mines to understand recent regulatory developments in the mining sector and jointly identify priority issues and actions in the context of the Short-Term Emergency Recovery Programme.

In a draft report prepared by the team after its visit, the World Bank says the use of single channel marketing of Zimbabwe’s export products has been a controversial aspect of the economic management framework for the mining sector for some years.

"Full liberalisation of minerals marketing would be one of the key signals to investors that the climate for investment in mining is favourable. For the moment liberalisation is only partially being embraced by the Inclusive Government," reads the draft report.

In the case of gold, the former requirement to surrender output to the Reserve Bank of Zimbabwe has been replaced by a system under which gold (after refining in Zimbabwe) can be marketed directly by producers, under authority of a Gold Export Licence. This development was welcomed by industry and is credited with encouraging gold producers to resume operations at mines rendered unviable under the former arrangement.

"The marketing arrangements for minerals other than gold have yet to be modified. Under the authority of its founding legislation, the MMCZ is responsible for marketing these minerals. It is not clear whether STERP’S 148 ("the marketing of these minerals other than gold will be done under supervision of MMMD together with MMCZ") was intended to bring about any change," reads the draft.

The draft noted that the marketing of products by Zimplats falls outside the MMCZ arrangement under the terms of its Special Mining Lease. Under STERP steel no longer falls under the MMCZ marketing regime on the grounds that it is not a mineral but an industrial product. By implication, the intention in STERP is for all minerals (other than gold) to continue to be marketed solely by the MMCZ.

"The mission considers that the role played by MMCZ in marketing minerals should be reviewed. This arrangement is mandatory and entitles MMCZ to charge a fixed percentage commission of 0,875 percent on realised sale values. This is highly unusual in the modern context, and no other neighbouring country employs such a system," the draft reads.

Consideration should be given to making MMCZ’s marketing role voluntary rather than mandatory. The mission said it is not obvious that all producers benefit from the current arrangement to an extent that would justify the imposition of the commission.

"MMCZ appears to serve different clients in different ways. For example, MMCZ may command market power when it consolidates the sales of numerous smaller producers that individually have limited market power, especially in export markets.

In this respect, MMCZ may be in a position to obtain better prices in the marketplace than would otherwise be realised and this benefit can be passed on to the producers. In return, producers see the MMCZ commission as justified," reads the draft.

However, the draft states that in the case of larger operations, especially those operated by international mining companies, MMCZ is not necessarily in a position to assert any greater market power than the producer nor does it have access to markets that the producer could not, if it wished, take advantage of through its own efforts.

"Therefore, in most circumstances the producer will derive no benefit from MMCZ marketing its minerals and the mandatory commission will be considered simply to be another tax," the draft reads.

The mission concluded that if MMCZ was in a position to provide some benefit to the producer through its marketing efforts, the producer might see the MMCZ commission as justified. Under the circumstances, it would seem reasonable to retain an option for MMCZ to offer fee-based marketing services on a voluntary basis.

Labels: NEOCOLONIALISM, NEOLIBERALISM, World Bank

posted by MrK @ 9:25 PM