Zimbabwe: Chrome Ore Ban – Industry Collapses – by Master Mushonga (The Daily Maverick – October 25, 2012)

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According to Chamber of Mines of Zimbabwe (CMZ), there are over 4 000 registered chromite claims currently of which 46 percent are held by indigenous Zimbabweans while the remainder is held by five large scale mining companies.

ZIMASCO, Zimbabwe Alloys, Maranatha and Monawood as big players do have synergies with small scale operators, have smelting facilities and in most instances enter into tribute agreements for the chrome ore production on claims owned by large operators.

Last year in April, the Government banned the export of raw chrome to encourage the local beneficiation of chrome ore into ferrochrome before exporting.

This change in policy was effected without considering the existing smelting capacity, investment needed to increase capacity, any guarantee to cheap and uninterrupted power supply as well as lack of chrome reserves that can last for 10 to 15 years to justify the establishment of a smelter.

There was need for government to come up with a long-term solution to its power deficit of around 800 megawatts before implementing the policy.

Even the Parliamentary Portfolio Committee on Mines and Energy failed to appreciate the concerns and the quantum of funding required for the mineral of over US$280 million required to recover and grow over the next five years. The country’s producers were also facing stiff competition from other producers, including South Africa and India who were operating much more viably.

The continued government stance on the ban of chrome ore is not achieving the desired objective. Instead it is reversing the gains previously achieved as the industry is on the brink of collapse.

Recently, ZIMASCO announced that it was facing viability challenges. As a result, it planned to scale down its operations by 40 percent. ZIMASCO has already shut down the West plant owing to viability challenges.

Some of the challenges include the over US$10 million ZESA debt which had resulted in the company being switched off, huge mining fees and taxes as a result small companies which do not have outside funding have gone under because of smelters failure to pay.

Zimasco, says its mining fee expenses have gone up more than 10-fold after government increased mining fees, ground rentals and levies by up to 5 000 percent effective January this year.

ZimAlloys has not been spared by the mining fee review as it is now required to pay US$1,5 million annually in mining fees and ground rentals for its 1 200 claims.

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