As a result of banning exports of raw chrome, Chrome Miners Association says the industry is now subjected to an extortionary pricing regime which is going to be determined by the Chinese who are running almost 100% of the smelting facilities in the country.
Zimbabwe’s mining industry is one of the top two foreign currency earning sectors, with tobacco being the other.
In a Cabinet briefing on 3 August 2021 it was reported that it was agreed to protect the ferro-chrome Industry by banning exports of raw chrome with effect immediately. They further agreed that exports of chrome concentrates were to be stopped by July 2022, giving the industry 11 more months of concentrate export.
The southern African nation boasts the world’s second-largest chrome reserves, behind South Africa, and most of this mining occurs along the Great Dyke, a 550-kilometer stretch that runs the length of Zimbabwe. Chrome, a blackish mineral, is used to produce stainless steel.
China has become one of the main buyers of Zimbabwe’s chrome.
In an interview with this publication about the state of the chrome industry, Chrome Miners Association chairperson Shelton Lucas said they have seen bans and being expunged without any progress.
“There is no difference with this ban; it is only making things for local miners who are going to be disenfranchised from their claims because they will not be having a return to guarantee the renewal of their special grants since they are going to be given low prices at the local smelters.
“If they want to invest in the concentration of chrome in requires a lot capital in terms of the jaw crushers, ball mills, trommels and spirals which would not make sense for one to invest in that for an annual waiver because to assemble that plant the logistics, expertise and the capital expenditures will not be able to make a meaningful profit in such short space of time,” he said.
However, this is not the first time the government has banned chrome exports in Zimbabwe, with a suspension of raw chrome exports initiated in 2007 and two years later under the Government of National Unity (GNU).
“What will happen with people who already have running contracts to supply the ore? they would have breached the contracts,” said Lucas.
“This means subsequently all the other mineral ores will be red flagged with international base minerals buyers because of the unpredictability of Zimbabwe as a reliable source of ore because of knee jerk decisions.”
While the government’s plan sounds ambitious and full of good intentions, the implementation would always be a problem, unless international investors were called into Zimbabwe’s benefaction business, which was far-from developed.
“Local players on paper do have the capacity to transform to beneficiation but it is almost impossible because of the security of tenure surrounding the ownership of the chrome claims since most of the claims are along the dyke there is issuance of special grants which are renewed biannually now that there is a ban on the issuance of new special grants and some of the mines are in podiformular state which get extinguished,” he said.
Lucas said it is very difficult to lure strategic partnership because chrome smelting is long term capital injection. The other big players like the Chinese, he said, have concessions which are bankable by doing so they can attract investors or can afford to take long term loans.
Smelters require a lot of electricity and dedicated lines on the grid. However, the ones in Selous are overwhelmed and this also poses a lot of challenges.
“In terms of monetary value it is very difficult to quantify the exact value needed to revitalise because there are many variable factors involved however a small chrome smelting plant ranges between $US450 000 to $US700 000 this is the datum line,” he said.
Other stumbling blocks affecting the industry is the fact that chrome mining cannot be done at small scale by doing so heavy machinery is needed, the excavators which are very expensive to hire.
“It was a welcomed situation when miners were given some rebates to import machinery duty free but this should also be extended to fuel also used by the miners.”
The much hyped smelters which are talked about are dotted around high voltage areas like Selous which is in the central dyke which leaves the south dyke places like Mberengwa with no smelters and north dyke like Guruve with no smelters.
This publication understands that smelter owners prefer Chrome ore near the smelters because of the logistics involved and this leaves the miners in the northern and southern dyke vulnerable to predatory pricing. Experts say this should be countered by having a robust rail system since the railway lines and sidings are there already to complement it is just resuscitation.
“The foreigners should not be allowed to control the whole value chain. For instance if they have smelters then they should not be allowed to have a horizontal backward integration of mining the ores this causes sabotage to the miners since there will not be any symbiosis,” he said.
Another challenge is that of poor road networks like particularly in the northern dyke in Guruve where some of the miners had to open a 35 km of access road to the loading bay. There is the problem of quality control of the iron to chrome ratio where some of the ores are sold at low value which doesn’t tally the prices.
Zimbabwe is targeting to be producing 100 tonnes of gold per year by 2023, which is part of a drive to achieve export earnings of US$12 billion by the mining sector by that time. Of the US$12 billion, gold, platinum diamonds will contribute US$4 billion, US$3 billion and US$1 billion respectively.
Chrome, iron ore and carbon steel will contribute US$$1 billion while coal and hydrocarbons will contribute the same. Lithium at US$500 000 while other minerals will constitute US$1.5 billion – Harare