Black granite: meagre revenue from prized stone

06 Nov, 2019 - 11:11 0 Views
Black granite: meagre revenue from prized stone

The Sunday Mail

Debra Matabvu

An old and battered haulage truck navigates its way through a narrow pothole-ridden road, releasing plumes of smoke as it contends with the sheer weight of its load. In its wake, it leaves a cloud of dust, forcing pedestrians using the same road to cover their noses.

Despite being endowed with black granite, Mutoko, Murehwa and Uzumba-Maramba-Pfungwe is not benefitting from the resource

Similarly antiquated trucks laden with granite are common in Mutoko, where for years they have been transporting the rock from surrounding mines.

They signify rich pickings for the mining companies, but they are also a reminder of the systematic plunder of the resource here, to the detriment of development and the local environment.

The stone is being exported to First World economies including Italy, Canada, the United States of America, Denmark and Australia.

In spite of its mineral wealth, Zimbabwe is losing millions of dollars in potential revenue from the mining of black granite due to poor monitoring, inadequate infrastructure, lax taxation systems and non-existent value addition which, investigations have shown, may be contributing to trade mis-invoicing.

According to the Centre for Natural Resource Governance, the absence of important infrastructure such as weigh bridges, compounded by colonial laws and poor monitoring systems, all which might be resulting in the under-reporting of the actual figures of granite extracted in the country.

Trade mis-invoicing — a method of illicitly moving funds across borders by deliberately falsifying the value of goods — falls under the umbrella of the broader issue of illicit financial flows, whereby money leaves a country with companies, individuals or officials deliberately flouting regulations to make easy gains.

In Zimbabwe, mis-invoicing is prejudicing Government of millions in potential tax revenue — a sum which could be benefiting the population instead of lining the pockets of companies.

Several companies mine in Mutoko with multinational companies from Italy and China. The companies include Red Granite, Quarrying Enterprise, CRG and Zimbabwe International Quarrying and Natural Stones Export Company.

Mr Farai Maguwu, the director of Zimbabwe’s Centre for Natural Resource Governance (CNRG), a civic organisation, says that in the black granite sector, companies are understating production figures in order to pay lower taxes. Officials at borders are also using the naked eye to estimate the weight of granite blocks, a practice that creates room for mis-invoicing and the doctoring of documentation.

“A truck should be weighed at the mine and also at the border in order to compare if the figures tally,” says Maguwu.

For 50 years, black granite has been mined primarily in the north-eastern parts of the country, in areas such as Uzumba-Maramba-Pfungwe, Murehwa and Mutoko.

Zimbabwe produced 223 356 tonnes of granite last year up from 161 123 tonnes in 2017, data from the Zimbabwe Chamber of Mines shows.

Mutoko Rural District Council alone produces around 121 000 tonnes, with 10 083 tonnes produced monthly.

Maguwu says the figures could be much higher, though verifying the figures might be difficult.

Absence of weigh bridges

According to Mutoko Rural District Council, the absence of Government mining officers at sites and the lack of basic infrastructure such as weigh bridges is contributing to mis-invoicing and the understating of production figures by some companies. As a result, local councils and the Zimbabwe Revenue Authority (Zimra) rely on statistics provided by mining companies for taxation purposes.

The chief executive officer of Mutoko Rural District Council, Mr Peter Sigauke, says verifying the authenticity of figures provided by the companies is near impossible.

“We are getting quarterly production figures from the companies and we have no way of verifying if these figures are true,” he says.

Sigauke says Government has failed to address the absence of weighbridges for 12 years now, which “makes it very difficult to ascertain the figures we are being given by the companies”.

“At one point between 2006 and 2007 we raised the issue of a weigh bridge to be erected near Mutoko District Council offices so that we would also be able to verify the figures,” he adds.

Although a high-level committee was set up to oversee the development, and a tender was subsequently flighted, the weigh bridge was never erected.

Zimbabwean law provides that local authorities receive a small fee for every tonne of granite extracted from their jurisdiction. Mutoko RDC gets $1 for every tonne of granite, but the computation of the exact tax figures is complicated by the absence of weigh bridges.

Minerals Marketing Cooperation of Zimbabwe (MMCZ) chief executive officer, Mr Tongai Muzenda, says they are now working on building weigh bridges to rectify the issue.

“We are doing this as a corrective measure since there is a possibility of figures being doctored due to the absence of these weigh bridges,” he says

A 2017 investigation by the Parliamentary Portfolio Committee on Indigenisation and Empowerment noted the lack of transparency around production figures in Mutoko and Mudzi districts due to the absence of infrastructure. It ordered the Mines Ministry to immediately facilitate the setting up of weighbridges in all mining areas.

Spokesperson of the Dimension Stone Producers’ Association, which represents nine granite mining companies in Mutoko, Mr Edward Muvuro says companies are not responsible for exporting the granite.

“The stones are measured by length, weight and height and automatically you have the weight,” he says.

“The blocks cannot go out until the MMCZ comes physically to the site to inspect the block and re-measure it. We are not authorised to do exports as exports are done by the MMCZ, who then raise an invoice for us. It is impossible to falsify the weight of the block,” he adds.

A receipt seen by this publication shows that 12 blocks of raw granite costs $30 000, a figure which granite processers refute and say the figure is too low and claim a raw block fetches millions.

The Zimbabwe Revenue Authority (Zimra) which is responsible for collecting revenue from the sales of the granite did not respond to questions sent to them.

Colonial-era laws

In addition to the lack of weigh bridges, the continued export of unprocessed granite is bleeding the country of potential revenue.

Speaking during a visit to a local granite processing factory – one of the few in the country – President Emmerson Mnangagwa said Government will introduce regulations banning exports of raw blocks.

During the visit he said a block of unpolished granite fetches less compared to a similar weight that has been cut and polished.  Thus, he said a blanket ban on the export of raw granite is imminent.

He also promised the introduction of robust monitoring systems to stem illicit leaks.

Mutoko Rural District Council’s Sigauke believes the proposed ban will stimulate local development and job creation.

“The cutting and polishing should be done in Mutoko, this is the only way there can be development in this area,” he says.

Muguwu, of the CNRG, however, opines that the problem lies much deeper.

He says tax rules and mining laws in effect since colonial days need to be overhauled to address the challenges besetting the sub sector.

“We have the Mines and Minerals Act, which was enacted in 1961 by the Rhodesian colonial government, the law was not to empower the indigenous people but to empower the minority,” he says. “There is a need to reform it to make sure it stops some of the loopholes that were causing leakages.”

Environmental impact

Back in Mutoko, the once pristine ecosystem has been ravaged, parts of the district have turned into wasteland, characterised by parched landscapes and poisoned rivers. Houses and public infrastructure have been scarred by blasting. People and livestock have drowned in gaping open mining pits, with little in terms of compensation coming their way.

Most companies use the open-cast mining technique, which leaves large pits in the ground.

The 2017 Parliamentary report notes the massive environmental impact caused by the mining.

“Environmental degradation comes as a result of quarrying, dumping of the large black granite boulders everywhere, pollution and unsustainable clearing of vegetation to pave way for quarry extraction and, to construct roads resulting in serious deforestation,” reads the report in part. “The use of heavy machinery, such as graders, front-end loaders, and heavy trucks, contribute to the rapid deterioration of roads,” it adds.

And in spite of its mineral endowments, Mutoko remains underdeveloped.

Mining companies are accused of neglecting the development of the communities they work in. Local villagers are unhappy. They say the companies’ social corporate responsibility activities are negligible.

“The local ecological debt and underdevelopment does not match with the area’s natural resources endowment,” Faith Chikowore of Mbudzi village says.

Previously, Government tried to force mining companies to develop the areas through the Indigenisation and Economic Empowerment Act, which compelled mining companies to cede part ownership of their enterprises to local communities through trusts. They were also required to provide seed capital to a local trust for community development projects.

But the law has since been repealed.

Mr Muvuro says the companies conduct their activities in an environmentally responsible manner.

“After we have mined we plant trees, grass and add soil at every area that we would have mined. But there are instances where villagers request us not to close pools which they say would benefit their livestock given that there are not many water sources in the area.

“The Environmental Management Agency (EMA) said we should close these pools but communities say their livestock benefit from these pools. We have since asked the communities to write to EMA and explain their predicament, which they have since done.”

In 2016, Government summoned some of the companies operating in Mutoko to explain why they were not contributing to local development. They simply cited the harsh economic conditions as unfavourable to such endeavours.

Mr Muvuro contends that the companies are contributing to development through building and modernising local schools.

He said: “At every school, from primary to secondary up to university level, we have students that we are paying school fees for. We do not limit this to Mutoko, we have operations in Murehwa, we have operations in Uzumba.”

This story was produced by The Sunday Mail and was written as part of Wealth of Nations, a media skills development programme run by the Thomson Reuters Foundation. More information at The content is the sole responsibility of the author and the publisher.

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