Maravi

(HERALD) State exploration key to owning resources

State exploration key to owning resources
By Tichaona Zindoga

THE "discovery" in 2006 of alluvial diamonds in Marange, eastern Zimbabwe, was considered something of a miracle — the proportion of the biblical manna from heaven — coming as it did at a time when the economy was being razed by hyperinflation.

People from all walks of life, from far and wide, descended on this area giving the once little known place not only the acumen to mould instant riches but also a significant salvation to people who were suffering from the effects of an unprecedented economic meltdown.

Marange diamonds also drew in their wake the notoriety that always stalks the precious gems the world over.

But three years before this "discovery", in 2003, someone had been "lucky" to find the deposits and laid claim on the area making the invasion by fortune-seekers that followed in 2006 literally a criminal infringement on private property.

The name of the person in question is Andrew Cranswick, the CEO of African Consolidated Resources, the company which claimed legal title to mine the Chiadzwa diamond claim.

In an interview with a radio station in April this year, Cranswick said the Chiadzwa find "was a lucky one".

He said: "It was found partially on good science, partially on prior information and at first we didn’t understand it because it’s a very unique geological deposit and when we did discover the actual existence of gem diamonds in that particular area — we had many, many hectares all around Zimbabwe exploring for many minerals — we immediately declared it as required by law through the Stock Exchange and we declared it to the Zimbabwean Government, a public declaration . . ."

He explained that he and his "bunch" of investors raised funding in London and listed on the London Stock Exchange.

They also acquired a diamond exploration company that had been closed down by Delta Gold in the 1990s, acquiring the company’s database, which was quite exhaustive.

On the strength of this claim, Cranswick was fighting the exploitation and sale by the Government and its partners of the diamonds in Chiadzwa.

After quelling illegal mining activities, Government has through its company, the Zimbabwe Mining Development Corporation, joined forces with two South African concerns and operationalised mining at Chiadzwa.

There are significant observations that can be made of the above expose.

The first is the commonality of the belief that Chiadzwa diamonds were a "lucky" find, both to Cranswick and to the ordinary people that thronged into the area to get this proverbial manna.

The fact, though, is that there was nothing lucky or manna-like in the find as the stones existed years and years ago and were, in fact, there for the taking, with some knowledge.

Stories abound of how locals were oblivious of the importance and value of the once ubiquitous stones in the area, and how some "clever" people got rich of the resource in the middle of such ignorance.

That certain companies from South Africa spent years siphoning precious minerals in the name of exploration and assessment at Chiadzwa and elsewhere is also a public secret.

Second is the apparent absence of Government initiative in the "discovery" of the gems, and, this so much from the events that followed, playing the Johnny-come-lately in the Marange.

It would seem Government was not able to dispatch, to use Cranswick’s words, any "good science" or "prior information" to undertake the work itself.

According to Cranswick, whose British company poured time, money and skill in exploring the fields, the Government prejudiced him and had at least to partner ACR in exploiting the gems.

Given revelations that Marange gems can satisfy a quarter of the world’s market in rough stones and more than satisfy Zimbabwe’s budgetary requirements, Zimbabwe’s new-found status as an important player in the industry should ask of something more than the previous "business as usual" approach.

This should also make sense of a sound policy framework in the area.

Opening the Third Session of the Seventh Parliament of Zimbabwe last recently, President Mugabe said the Mines and Minerals Amendment Bill, which was first presented to Parliament in 2007, shall be tabled once again, for consideration during this session.

The Bill will seek to discourage speculation, facilitate investment in the mining sector by both local and foreign investors, as well as ensure that the country derives maximum benefits from its vast array of minerals.

The Zimbabwe Exploration Corporation Bill, which provides for the establishment of the Zimbabwe Exploration Corporation, shall also be tabled in the august House during the session.

Through the Zimbabwe Exploration Corporation, Government will be more actively involved in mineral exploration and thereby be in a position to determine the types and quantum of the country’s existing mineral resources.

Finance Minister Tendai Biti has weighed in saying that Government had to address all issues related to exploration.

Presenting the Mid-Term Fiscal Policy Review last week, Minister Biti said it was essential that a database of all known minerals in Zimbabwe be established.

He regretted that Zimbabwe continued to suffer from the culture of hoarding of claims and continuous renewal of unmined claims, advocating that Government adopt a "use it or lose it" approach with respect to speculative claims.

Government’s undertaking to be actively involved in the exploration of minerals is key and it is only prudent that concrete plans be put in place towards the establishment of the envisaged exploration body.

The establishment of the company has in the past remained in limbo, mainly due to lack of financial resources.

Analysts say exploration by nature is risky business, requiring large investment expenditure outlays and leading to the little exploration Zimbabwe has seen since the 1980s.

Exploration is the most expensive aspect of mining, analysts say, as prospective miners will have to sink in a lot of money without equal or better returns on investment.

"It is very risky enterprise and many private investors are sceptical of mining exploration," former Mines Deputy Minister Murisi Zwizwai pointed out earlier this year.

Mining exploration, said Mr Zwizwai, can be a multi-million-dollar exercise for only a small piece of land, which means undertaking the exercise at a nationwide scale would require billions of dollars.

But this is not a Zimbabwean story alone.

It is said that global experience estimates the average mining exploration success rate at 12 percent as regards viable resource returns on exploration investment.

"The absence of extensive exploration work has perpetuated a situation where most of the local underground minerals remain inferred resources," noted one report early this year.

"This is despite the fact that the country requires appreciation of the actual untapped mineral resource base."

There are compelling reasons for serious Government work in the promotion of exploration ventures.

Extensive mineral exploration would avail Government a strong instrument to attract investors as it would have details on the geological nature, mineral type, quantum and lifespan of discovered mineral ore bodies.

On the other hand, it has been noted that lack of new exploration would make it difficult to switch to virgin mines once the current ones mine out, threatening the future of mineral output.

Virgin mineral bodies are said to have become more critical considering foreign investors’ frenzied interest in the local mining industry after the formation of the inclusive Government last year, which led to the stabilising economic conditions.

While Government might be proactive in the field, it is also critical to encourage private sector participation.

One of the ways to do so is to scrap prohibitive pre-exploration levies.

The Finance Ministry has been charging a pre-exploration levy for new mining projects thus discouraging new players.

Mines and Mining Development permanent secretary Mr Thankful Musukutwa last May said the US$100 000 charged for Exclusive Prospective Orders was inhibiting new investment in mining, especially under capitalised local miners.

An EPO is a licence granted to potential investors to prospect for minerals in a particular area before they are authorised to mine under a Special Grant.

Government levies a further US$100 000 for Special Grants on strategic and energy minerals such as coal, methane and diamonds.

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Labels: MINING, THANKFUL MUSUKUTWA

posted by MrK @ 12:55 AM