MINING is one of the key sectors that was in many previous budgets, including the current one, identified as fundamental in shoring up Zimbabwe’s economic fortunes. So critical is the sector that government saw it fit to exempt it from the prevailing gruelling 18-hour power outages. The sector was also asked to pay for its power in foreign currency to guarantee constant and uninterrupted electricity supplies because of the very critical position it holds.
It then boggles the mind when the Chamber of Mines chief executive Isaac Kwesu tell us that: “..while we appreciate that government is ensuring that mining gets dedicated power, mining companies have been paying Zesa for electricity in advance, but they are still experiencing power outages — and without power there is no production and we appeal for Parliament intervention on this. There is a new development that miners should pay for electricity, royalties and taxes in foreign currency based on 50% retention, but now that Zesa has to be paid in foreign currency there is need for additional ability to do so because diamond royalties for example are 50%, and then electricity takes up 35%, and at the end there will not be sufficient foreign currency to import the critical raw materials that are required for growth of the mining sector.”
This sounds quite gross. It’s like a farmer who milks his cow dry and denies it feed and water, but still expects the same cow to continue providing him or her with the same amount of milk, if not more. If this is, indeed, the case then we shudder to imagine what the future holds for the troubled economy.
The Chamber of Mines chief has gone to Parliament to beg for assistance, but past experience tells us that the legislators could bark as much as they can on behalf of the miners, but very little may change. This issue is a Ministry of Finance baby, and we seriously doubt whether the miners’ challenges will ever be entertained any time soon given Treasury’s current obsession with its macro-economic policies. But we are afraid to say this mining sector goose needs feeding for it to continue producing the golden eggs.
The situation in the sector is quite disturbing coming at a time when the country has recorded a major drop in foreign currency receipts. This is quite spine-chilling for a country that is hoping to ride out of the woods.