Maravi

(NEWZIMBABWE, BLOOMBERG) Miners reject State marketing of minerals
19/05/2013 00:00:00
by Bloomberg

[COMMENT - I'm sure Alex Mhembere would 'reject' the plan to only sell minerals through the state. De Beers for a decade was smuggling diamonds out of Zimbabwe. De Beers is a criminal organisation, and it does not want transparancy or oversight. - MrK]

THE Chamber of Mines has rejected a proposal by the Mines Ministry for the State to control mineral production and prices, a draft response from the industry organisation has revealed.

Earlier this month, the ministry proposed the auctioning of mineral deposits, restricting production of commodities deemed strategic and that the state sell the output from all mines.

The ministry is seeking comment from mining companies before taking the proposed policy to parliament to have it passed into law. Zimbabwe has the world’s second-biggest platinum and chrome reserves.

The proposal is “gritty and confrontational,” the Chamber said in a draft copy of its response, which may be given to the government later this month. “Ideologically the policy seems to be at variance with the market-based national policy that the country has adopted.”

Companies such as Impala and Rio Tinto Group are currently free to sell their own minerals. The policy proposals come after the leading mining companies agreed to comply with an existing law to cede 51 percent stakes in their local assets to black Zimbabweans or the government.

“We will contribute effectively to the on-going development of a new mining policy,” Alex Mhembere, Chamber of Mines president, told the body’s Annual General Meeting, held last week at the fly-fishing resort of Troutbeck in northeastern Zimbabwe.

No Trust

“We do not regard our role as opposition to government but partners seeking the same national goal and aspiration.”
In addition to platinum and chrome Zimbabwe has deposits of coal, gold, copper, diamonds and iron ore.

If implemented, the marketing policy will be a reversal of an earlier liberalization of mineral sales, which formerly had been undertaken by the Minerals Marketing Corporation of Zimbabwe and, in the case of gold, a unit of the central bank.

Under the proposal, gold and platinum group metals will be sold by a dealer authorized by the Ministry of Finance and all other minerals will be sold by the MMCZ.

“This policy on minerals marketing is premised on the notion that the private sector cannot be trusted,” the Chamber of Mines said. “The world over producers have the right to market their own minerals based on an approved marketing contract.”

In addition to the changes to the marketing of minerals the ministry proposed auctions of deposits as well as imposing new taxes, the policy showed. It suggested a resource rent tax, defined as a tax on profits in excess of an average national return on investment, and the regulation of mineral prices.
‘Socialist Thinking’

“Having gone through the lost decade, where the country had a fatal flirtation with price controls, this should be avoided at all costs,” the Chamber said.

Zimbabwe’s economy entered a recession around 2000 after a disputed election and the imposition of a land reform policy that involved the takeover of white-owned commercial farms.

Over the next decade the government controlled prices and imports. Inflation rose to 500 billion percent, according to the International Monetary Fund (IMF), and the economy contracted by 40 percent between 2000 and 2007.

The country exited recession in 2009 and ended a political stalemate after President Robert Mugabe and rival, Morgan Tsvangirai formed a coalition government following the intervention of the 15-nation SADC grouping.

The proposals “will effectively close the country to private exploration,” the Chamber said. The government document “is based on socialist thinking, where the State has a strong hand over the affairs of mineral extraction. Zimbabwe has largely been a market-based economy.”

Labels: ALEX MHEMBERE, MINING

posted by MrK @ 3:08 PM