The Sunday Mail
Business Editor’s Brief
VOLTAIRE, a 17th century French philosopher once said: “I do not agree with what you have to say, but I’ll defend to the death your right to say it.”
While individuals are mere mortals, ideas are immortal. Debating and volunteering opinions are quintessential aspects of contributing to a knowledge portal that can ideally be used by Government for either decision-making or policy formulation.
A fortnight ago, I had to engage in panga duels with my better judgement, deciding whether it was particularly wise to wade into the Zimbabwe dollar debate that had come to the fore like a bolt from the blue. Of concern to me was the seeming name-dropping and name-calling that was beginning to cloud the whole debate.
In my June 1 instalment titled “Zim dollar talks must be rational”, I cautioned that “conversations on the Zimbabwean dollar are generally emotive and often degenerate into unnecessary name-calling and mudslinging”, and boy-oh-boy, it did rain mud.
Fortunately, we have arms of the State that have been able to winnow and sieve ideas over the decades, overruling wayward proposals. But in philosophy, wayward proposals form an integral part of the decision-making process.
German philosopher Georg Wilhelm Friedrich Hegel believed in the triad (a group or set of three related people or things) of thesis, antithesis and synthesis. A thesis by definition is usually an intellectual proposition, while an antithesis is a negation of the thesis or a reaction to the proposition. However, the antithesis serves to reconcile common truths, yielding something closer to a rational proposition. This is why debates and opinions are sacrosanct.
The Bikita mining boob
Last week, Nan Jiang Africa Resources’ treasure hunt in Bikita, where it was hoping to mine diamonds, came to an ignominious end. The firm, a consortium of Chinese investors and a local businessman, plunged head-long into the venture, recruiting more than 300 workers and 21 security guards.
The miner had to stop operations after it emerged that the kimberlitic pipes at its Devuli Ranch were non-diamondiferous.
Surely, the golden rule dictates that exploration has to precede the actual mining activity, and you don’t need a 300-strong workforce to explore.
How on earth does a company begin mining on ground that hasn’t been extensively explored? How many companies are doing the same?
Most of the mining companies in Chiadzwa, with the exception of Mbada Diamonds, have not made any significant investment to ensure that they explore their mining claims first before strategically exploiting both the alluvial and kimberlite diamond resources.It seems much of the emphasis has been on mining near-surface alluvial diamonds.
Some time back I had the opportunity to talk with the then chief executive of African Consolidated Resources (ACR) Andrew Cranswick. ACR was seeking claim over the vast diamond fields then. He believed that there was need for an exploration exercise to really establish the kimberlitic source of the current alluvial diamonds.
The current situation where diamond miners are currently lobbying Government for additional claims, especially in the wake of dwindling diamond resources, is worrying. But this raises critical questions regarding local exploration. Experts claim that apart from an exploration exercise that was conducted in the early 1960s, there hasn’t been any meaningful work to audit the country’s estimated mineral reserves.
Establishing the extent of our mineral wealth is useful for the country as it needs to negotiate with potential investors from a position of strength. During the inclusive Government, there were quarters that thought having the country classified as a Heavily Indebted Poor Country (HIPC) – an International Monetary Fund debt relief programme – would help shake off the country’s US$6 billion external debt burden.
However, Zanu PF successfully argued that the country was rich and could not be classified as poor. In the world of economics, mineral wealth needs to be quantified and translated into actual wealth that can be used either as collateral or as leverage to access multilateral facilities. And to do this Government clearly has to operationalise two institutions that are critical in defining our mineral wealth in exact terms: the Sovereign Wealth Fund (SWF) and the Mining Promotions Corporation (MPC).
Formed last year to create a national mineral balance sheet, the MPC is quite integral to ascertain local mineral resources.
It is encouraging that Government has begun breathing life into this key institution but additional efforts must be directed towards funding it.
Mines and Minerals Development Minister Mr Walter Chidhakwa tentatively proposed a levy to finance the Corporation.
Mining houses, who already claim to be laden by punitive royalties and fees, are however opposed to the proposal.
However, a SWF could have came in handy.
Gladly, the Sovereign Wealth Fund of Zimbabwe Bill was gazetted on January 10, 2014. By pooling resources together from various sources, Government can naturally be able to finance strategic initiatives. But we mustn’t be naïve: We know that it will take a while for the Fund to be fully operational.
Government has to be smart.There are other fund raising initiatives that can be pursued. Sometime in 2012, Government negotiated with Germany, Japan, North Korean and Chinese companies to conduct mineral exploration and aero-magnetic surveys across Zimbabwe.
I am sure there are still potential private investors that might be interested in partnering Government in the project.
All these initiatives need to be prioritised because they might be the key needed to unlock funds to sponsor the country’s local development initiatives.
Multilateral financiers like the World Bank and the International Monetary Fund are currently not prepared to fund local projects purportedly because of the country’s US$6 billion external debt. Well, currently the World Bank is marketing its “Billion Dollar Map” initiative through which it expects to produce an extensive database of the continent’s mineral makeup. The project is forecasted to take more than a decade. So other funding options for the MPC must be explored.
China recently expressed its commitment to partner Kenya’s $70 million initiative for aerial mineral surveys of the whole country.
The country can also forge similar alliances. It is not a secret that Zimbabwe is losing out on most of the deals it is signing with investors. The Zisco deal is a glaring example.
A global research firm BMI (Business Monitor International) estimates that the country needs an estimated US$3 billion to explore its mineral resources. However, market watchers contend that figure could be overstated considering that South Africa, through the Geological Society of South Africa (GSSA) and Council of Geoscience (CGS), will be carrying out a R145-million project (US$14 million to resurvey and map selected metallogenic provinces using modern technologies and techniques.
The three-year project concentrates on three of South Africa’s historically less systematically explored, but highly prospective regions between Prieska and Springbok, in the Northern Cape; the Tugela area, in northern KwaZulu-Natal; and the Barberton and Sabie-Pilgrim’s Rest areas, in Mpumalanga.
