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Crisis Group Releases Damning Report on Zimbabwe Gold Sector

MUTARE– Zimbabwe’s gold sector is compromised on several fronts despite the new dispensation pinning hopes on mining to salvage prospects for economic recovery after decades of stagnation. A damning report by International Crisis Group calls for sweeping reforms to rid the sector of systemic violence, low productivity and raging conflicts.

Violence in the sector is symptomatic of Zimbabwe’s flawed centralized gold buying scheme, patronage- based economy and obsolete legal and regulatory system, says the International Crisis Group.

In the report, All That Glitters is Not Gold: Turmoil in Zimbabwe’s Mining Sector, Crisis Group gave a detailed comparison of three mining sites, based on new field research revealing that political interests are driving gang violence around gold mining sites.

Crisis Group said to avert further turmoil, President Emmerson Mnangagwa’s government should give artisanal mining cooperatives legal standing, pay gold producers at world prices, improve mining dispute resolution and bolster law enforcement.

Mining companies should cooperate with artisanal miners, whose representative bodies should professionalize.

Crisis Group economics of conflict fellow Anouk Rigterink, notes that reforms are the solution, including formalization of the artisanal gold sector and a reform of an archaic legislative framework.

In a statement on the launch of the report, Rigterink suggests government should prioritize giving artisanal mining cooperatives legal standing, paying gold producers benchmarked prices to reduce smuggling and strengthening mining dispute resolution

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Mining companies should also cooperate with artisanal miners, whose representative bodies should embrace professionalism, he said.

“Reforms and development in the gold sector are crucial. Gold is Zimbabwe’s largest foreign exchange earner and Zimbabwe’s only major export commodity that has not dropped radically in price during the worldwide Covid-19 pandemic.

“The Mnangagwa government, mining companies, civil society and international actors can take steps to dial back this worrying uptick in violence. Absent such steps, cycles of violence will recur, hurting industrial miners’ profits and artisanal miners’ livelihoods, not to mention President Mnangagwa’s political standing,” said Rigterink.

“Zimbabwe’s centralized gold buying scheme underpays producers, a practice that encourages smuggling and erodes industrial mining profits, leading companies to close mines.

“Zimbabwe’s legal system is unpredictable: artisanal miners have no collective rights under the law and in case of disputes authorities often apply the law unevenly, failing to hold politically connected parties to account and playing havoc with mining companies.

“…Government should revise the country’s Mines and Minerals Act to give artisanal mining cooperatives legal standing, and adequately fund the ministry of mines unit responsible for the artisanal mining sector,” reads part of the report.

Crisis Group also called for greater involvement of Parliament through resumption of its enquiry into gold-related violence, suspended due to COVID-19, and scrutinize the role of politicians connected to the ruling party.

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Mining companies should recognize that their mining operations will almost inevitably stir up tensions with artisanal miners, said Crisis Group.

“Rather than playing into Zimbabwe’s patronage system, which ultimately benefits neither party, mining companies ought to cooperate with and support artisanal miners’ associations, including by granting them mining rights and providing training and resources.

“Furthermore, companies, as assembled in the Zimbabwe Chamber of Mines, should push the government to give artisanal mining cooperatives legal standing,” said Crisis Group.

Zimbabwe has the second biggest informal economy. Droves of unemployed youths have tuned to gold, Zimbabwe’s largest foreign exchange earner in 2019 gold production fell below target of 40 tonnes but reached a value estimated at $3bn.

Mineral exports responsible for 60% of the country’s export earnings, and the mining sector contributing around 16% of national GDP. The mining sector contributed an average of 6, 2% to the gross domestic product (GDP) between 2009 and 2015 and 8, 4% from 2016 to 2018. In 2017, mining contribution expanded by 9, 2% and 10, 1% in 2018.

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