GOVERNMENT is considering repaying the bulk of nearly 90 investors who applied for special grants in 2011 when the State unveiled plans to ramp up coal production and output in a bid to stabilise a sustained economic crisis in the country.
In hindsight, it appears the Ministry of Mines and Mining Development now admits that it could have been in a hurry to collect huge sums of money in application fees without considering if it could accomodate additional coal mines in the country’s coal hotspots in Matabeleland North province where the bulk of the concessions are located.
Last week, Mines and Mining Development Minister, Walter Chidhakwa (pictured), said it was impossible to add 85 more coal mines, but promised that investors who failed to get licenses would be refunded.
“We received 85 special grant applications,” Chidhakwa told delegates at the 76th annual general meeting (AGM) of the Chamber of Mines of Zimbabwe in Victoria Falls on Friday.
“But can you see 85 new coal mines in Matabeleland North? I don’t know. You are the experts, but I don’t think it is the correct way to go. We collected in some cases US$500 000, US$100 000 from these people. It is not money that cannot be refunded. It is a lot of money. We have been operating one coal company here. So can we operate 85? We must discuss it,” said Chidhakwa.
The Zimbabwe Stock Exchange-listed Hwange Colliery Company Limited had operated the only coal mine in the country until about four years ago when the coalfields were opened to other investors, leading to the emergence of new players like the vastly expanding Makomo Resources.
Production from the new players pushed growth by 27,5 percent in 2014 to 6,35 million tonnes, and output is projected to continue rising, riding on significant investment in new plant and equipment at Hwange.
Applications for the special grants were invited when Obert Mpofu, now Transport and Communications Minister, was the Minister of Mines and Mining Development in 2011.
Chidhakwa moved to the Ministry in 2013.
One of his major policy decisions was a proposal to consolidate the seven diamond mining firms operating in the Marange diamond fields into one big firm that is easy to manage.
Most of the diamond firms were licenced during Mpofu’s tenure, and some of the deals sealed at the time had been the subject of court cases.
At the AGM, Chidhakwa also highlighted that gold output would increase to 30 tonnes in the next three years due to several measures recently put in place to enforce delivery into the formal market by artisanal producers.
It is an ambitious target.
At its peak, the gold mining sub-sector produced 27 tonnes of the metal in 1999.
But then, the economy was stable, the investment climate was conducive and metal prices were bullish on the international markets.
Output declined to about seven tonnes at the height of hyperinflation in 2008.
Zimbabwe lost its right to sell gold directly to the international bullion market.
Countries must produce at least 10 tonnes of gold per annum to be admitted into the London Bullion Market Associations.
Chidhakwa said the gold production and surveillance project rolled out to ramp up production and deliveries to Fidelity Printers and Refineries had started to bear fruits.
If the trend continued, Chidhakwa said, it was possible that gold output would reach 30 tonnes by 2018, from about 13 tonnes in 2014.
He spoke as the Chamber of Mines announced that gold output was up 25 percent to about four tonnes in the first quarter of 2015, compared with the prior comparative period in 2014.
The bulk of the deliveries came from small scale players, many of whom had until now been channelling output into the black market.
“These efforts have already started to bear fruits with gold production increasing by 25 percent in the first quarter compared to the same period in 2014,” Chidhakwa told delegates at the AGM.
“It is our hope that by 2018 we reach an annual production of 30 tonnes if we are to go ahead in the same spirit as seen in the first quarter of the year.”