Golden Goose Copped

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  Zimbawae’s government, reeling from a debilitating liquidity crunch since the 2009 decision to adopt the U.S. dollar as its official currency, is militarizing gold mining operations. This is among a host of desperate measures to raise funds for the treasury.
  The move has sparked an outcry. However, mining experts and economists support it, saying the government is justified in taking the drastic measure to prevent the precious metal from being smuggled into the parallel market. It has deprived the treasury of much-needed revenue to fund the country’s development programs.
  Finance Minister Patrick Chinamasa has consistently found it difficult to fund the budget though it averages a paltry $4 billion annually. Consequently, the government has turned to the “golden goose” - the mining sector, bringing security agents in to plug revenue leaks.
  According to the Chamber of Mines of Zimbabwe, mining’s contribution to the gross domestic product(GDP) rose from 8 percent in 2009 to 16.9 percent in 2014. The figure is projected to edge up to 17.8 percent in 2015.
  Direct tax contribution from mines also rose exponentially during the same period from $57.8 million to$445 million in 2013. But gold’s contribution to total mineral exports stood at 26.9 percent in 2013, falling far short of the 57.3 percent from 1993 to 2003.
  The mining sector employs close to 50,000 people, with thousands more operating as independent smallscale miners. It is the latter who have been fingered the most in the smuggling and side-marketing of minerals, particularly gold.
  The past months saw the government deploy special police personnel from the Criminal Investigations Department’s minerals unit, army personnel and intelligence officers at gold mines and stamping mills to ensure there were no gold leaks. Officials from the Zimbabwe Revenue Authority and Fidelity Printers and Refiners, an arm of the Reserve Bank of Zimbabwe(RBZ), were also deployed.
  Small-scale miners in the Matabeleland North and South provinces south of Harare say there is heavy police presence at mines and stamp mills to ensure they sell all their gold to Fidelity. The miners say it is depriving them of significant income as the prices offered by Fidelity are significantly lower than those offered by private buyers. They complain that at $32 per gram, the RBZ is paying much less than the world price of about$40 per gram.
  Trynos Nkomo, President of Zimbabwe Miners’ Federation, said security personnel have been deployed even at small stamp mills when the focus should be on dealing with politically connected individuals if the government is serious about plugging leaks. “Small-scale miners can’t smuggle gold and other minerals because they do not have the resources and connections. It is the ‘big fish’ who are buying from illegal miners and small-scale ones. That is where the focus should be,”said Nkomo.   “In addition, the government should empower small-scale miners by providing them with equipment so that they can increase production, instead of wasting resources by stationing police officers at mines and stamp mills.”
  “In order to curb side-marketing of gold, the Ministry of Mines and Mining Development shall, with immediate effect, issue artisanal mining permits to anyone interested in dealing in gold and selling to Fidelity,” said Walter Chidakwa, Minister of Mines and Mining Development. “These permits, which are compulsory, shall be issued free and logged in a register for monitoring.”
  Chidakwa said the licensing of artisanal miners through these permits is expected to enable Fidelity to mop up all the gold currently in the hands of informal and unregistered miners. The ministry will also use these formal records to track performance for future capacitation and financial assistance to increase gold production.
  Toendepi Muganyi, Vice President of the Chamber of Mines of Zimbabwe, backed the government’s stance.“In a gold-producing country like Zimbabwe, the most logical action to improve formal output is to ensure all gold-producing entities channel or market their gold through the approved marketing entity,” he said.
  Muganyi said increased enforcement and monitoring is starting to bear fruit. The contribution by small-scale miners increased from about 250 kg per month to above 400 kg per month in the recent months.
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