He is handling such an important Ministry. One that has been dogged by controversies and allegations of corruptions. There are a lot of things that the new Minister of Mines and Mining Development could do- but he does not have much of a runway (till the 2018 elections) to do everything that needs to be done. There is investor interest, geo-surveys, production capacity, skills, energy, taxation regime, property rights, transparency and accountability. It is a lot- he will have to prioritise and focus more on addressing the regulatory aspect, legacy issues and capturing as much resource rents from current operating mines as possible.
If I were Winston Chitando this is what I would do in the next 100 days;
- Put a moratorium on new mining deals or investments until after there is clarity on the mining legal and policy framework. With the time-frame- in the run up to the new elections there is inexorable pressure to demonstrate results. The country is unlikely to make good deals negotiating from such a position. In any case, no new investment will have any meaningful effect on the economy before the 2018 elections. There are other things that can be done.
- Finalise the much talked of new ‘fiscal regime’ for the sector. Talk of this new fiscal regime has been on-going for the last 2 years, if not more. There has to be conclusion to these issues.
- Provide more clarity on the Indigenisation and Economic Empowerment Act amendments. Chitando is an industry man- he needs to reach out to that constituency and communicate the reforms around the Act. The chaotic implementation of the Act and the policy flip-flopping have really dented industry trust. It cannot be undone by one statement by Chinamasa in a Budget Speech. There should also be efforts to clarify what now happens to established Community Share Ownership Trust Schemes.
- Provide clarity on the platinum export tax (that has been ominously hanging as a hangman’s noose -over the platinum sector) and beneficiation.
- Work hard on providing direction on the principle mining legislation and policy framework. Reform of the Mines and Minerals Act has suffered a lot of false starts. There was a 2007 draft and there is currently a different 2016/2017 draft. If we are reforming our principal legislation (as I believe we should) then we should communicate that and begin that work in earnest. If we are not proceeding with those reforms then we should communicate the same. There is no such clarity at the moment.
- Clean up the State-Owned Enterprises (SOEs). Much of the rot in the mining sector is in SOEs such as the Zimbabwe Mining Development Corporation (ZMDC) and the Minerals Marketing Corporation of Zimbabwe (MMCZ) among others. There should be a complete overhaul of these institutions- new boards, new demands on their reporting and accountability, cutting wasteful expenditure.
- Push for a full investigation into the whereabouts of the $15Billion. This figure will not just go. It was too big, it was stated by then President himself, it is too garish. It will hang on any ZANU PF government like an albatross. It’s a mess Chitando may not be interested in getting himself in- politically. He must steel himself.
- Win over the citizenry. If there is one sector that is reviled for deep seated corruption and mismanagement it is the mining sector. This is due to the heightened expectations that the government whipped up when alluvial diamonds were discovered in Marange- and the consequent failure of government to meet those expectations. Who doesn’t recall Obert Mpofu- then Minister of Mines- stating that Zimbabwe will never beg again! Chitando must do things that demonstrate that mining will now be handled in a transparent and accountable manner. A clear minerals policy and presentation of the same at a multi-stakeholder and public conference would go a long way in doing this. A policy that commits to full and dis-aggregated (by project) disclosure of mining revenues.
- To the extent possible support the RBZ in its efforts to mop up gold from artisanal and small scale gold miners. This will include supporting monitoring efforts and assessing the impact of paying miners in bond notes (even with the export incentive) as opposed to hard currency and adapting accordingly.
- I would seriously consider removing the export incentive for mineral exports. Our mineral sector is largely dis-articulated from the rest of the industry- therefore- miners are still going to export. The demand elasticity of most mineral commodities is not highly variable.
- Hold an investor’s conference (or multiple- in the right foreign capitals) only after finalising the minerals development policy and the reform of the Mines and Minerals Act. Prostating ourselves in foreign capitals is not something we aspire too but we do need foreign capital for our large-scale mining industry. This may happen post the first 100 day cycle.
- There are a lot of property rights issues that need to be addressed – the two that possibly need urgent attention is the bundling up of companies operating in Marange into the Zimbabwe Consolidated Diamond Company; and the involuntary ceding of land held by Zimplats to the government. For all these companies’ faults and our failure to negotiate good terms and manage our resources well- we must demonstrate that we respect property rights and abide by our laws. Gangsterism must be a thing of the past.
- Work on models that ensure that mines always have enough energy. Production has consistently been compromised by consistent electricity supply challenges. Mines must be prioritised and models where they secure they own power supply through the national grid should be explored.
- Get a hold of what is happening in Gache Gache.
*The views expressed in this blog are personal and do not in any way, shape or form represent the views of any organisation.