Zimbabwe to press ahead with platinum export ban

21st November 2013, Comments 0 comments

Zimbabwe, the world's number three platinum producer, is determined to ban exports of raw platinum and to force firms to refine locally, the new mines minister told AFP Thursday.

"We are determined to ensure that a refinery is put up in Zimbabwe," minister Walter Chidakwa said, speaking during a visit to Johannesburg.

"Once you put up a refinery, surely we must put a law that says we do not want our platinum to be exported as raw," he added.

"We want our minerals value-added," he said.

Cash-strapped Zimbabwe is increasingly looking to the mining sector to help solve its liquidity shortage, which economists say has worsened since the July elections won by veteran leader Robert Mugabe.

The greyish mineral used in the auto industry and in jewellery production, is shipped out of the country in raw blocks for refining in neighbouring South Africa, the world's largest platinum maker.

President Mugabe last week warned that he would halt platinum exports if mining companies refused to build a refinery.

Platinum miners had been issued an ultimatum by the former power sharing government to set up a refinery, but that deadline has already passed.

Chidakwa said platinum producers operated by South African-based Anglo-American Platinum, Impala Platinum and Aquarius Platinum, argued that they are yet to reach the minimum production threshold of 500,000 ounces that justify the creation of a refinery.

The affiliates of the three companies produced around 347,000 ounces last year and are expected to produce around 400,000 ounces in 2013.

Chidakwa shot down that argument, as "academic."

"It is something else that drives them not to go that route, but we are determined."

"As government we will be announcing measures on what we will do to ensure that a refinery is set up."

Accounting for six percent of global output, Zimbabwe is the third producer of platinum after South Africa and Russia, and has the second-largest known reserves after South Africa, according to the country's chamber of mines.

With labour unrest curbing South African production, many see an opportunity for Zimbabwe to become a bigger player.

But electricity cuts and political instability remain a problem.

Zimbabwe will in the "next five to 10 years enjoy reasonable stability" and start to claim a bigger role in the global platinum market, said Chidakwa, a former investment chief appointed mines minister after the disputed July general elections.

Mining the 'centrepiece' of economic recovery

President Mugabe has labelled the sector mining sector, which has grown steadily in recent years to overtake other sectors such as agriculture as the "centrepiece" of economic recovery. The sector's share of the GDP has nearly doubled from an average 10 percent in the 1990s to nearly 20 percent of GDP.

Mineral exports rose by about 230 percent between 2009 and 2011, making mining the leading export sector, according to the African Development Bank.

Last year alone, said the bank, mineral exports accounted for 64 percent of total exports, led by platinum, followed by gold and then diamonds.

"We look at the mining sector as one that will resolve the liquidity crunch issues ... as one that will re-introduce short term funding," said Chidakwa, speaking on the sidelines of the annual general assembly of the Kimberely Process, the diamond trade regulator.

Takunda Mugaga, researcher with think tank Econometer Global Capital, said it was a "correct perception" that liquidity has come under strain since the elections that retained 89-year old Mugabe to power.

Imports of the staple maize meal to cover food shortages have added a pressure on money supply, said Mugaga.

The new minister is also looking at overhauling the Mines and Mineral Act which has been used to regulate the industry for the past 52 years.

"We are taking a look at the entire piece of the legislation," he said with plans to submit cabinet proposals to parliament by early next year. "We want to make it current, (and to) include the issues of value addition."

© 2013 AFP

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