MUTARE– Political elites, linked to the ruling party are frustrating efforts to formalize artisanal gold mining as they are deriving profits from illicit trade, a new study has revealed.
A report highlighting key findings of a study undertaken by Southern Africa Resource Watch (SARW) reveals that political elites mainly from ZANU PF, are benefitting from the current informality of the sector.
Chinese ‘investors’ have also invaded the sector, negatively affecting productivity from Artisanal and Small-Scale Gold Mining whose volumes delivered to Fidelity Printers and Refineries, the country’s sole legal buyer of gold are decreasing.
The study which sought to investigate the political economy of ASGM formalization in Zimbabwe through a policy or legislative framework, shows that ‘illicit trade in gold (due to informality) and distorted local markets are undermining gold deliveries to the government’.
It said artisanal mining has evolved from a peripheral activity and now ‘contributes to the broader economy by creating business linkages and opportunities for local small and medium enterprises, which provide a wide range of commodities to the sector’.
However, despite the centrality of ASGM as a major source of income and contribution to the national economy, there has been little success in integrating it into the formal economy.
SARW urged government to take concrete steps to address leakages by changing policies and formalizing the ASGM sector through the Mines and Mineral Bill as well as domesticating the Africa Mining Vision (AMV).
“Despite being illegal, artisanal gold mining has become a major contributor to Zimbabwe’s annual gold output based on gold deliveries to the government-owned Fidelity Printers and Refiners (FPR).
“Since ASGM is currently governed by policy pronouncements, there is a need for a clear legal or regulatory framework that defines ASGM and governs its operations.
“It seems government is more interested in gold mobilisation without formalizing the ASGM sector. Artisanal miners need to be given titles in order to encourage long-term investment and planning.
“ASGM must be clearly defined in policy terms as a starting point towards formalization,” said SARW.
Latest statistics show that gold deliveries to the country’s sole authorized buyer, Fidelity Printers and Refiners, fell 16,8 percent in 2019 from 33,2 tonnes to 27 tonnes in the prior year comparative in 2018.
Deliveries to Fidelity from small miners went down to 17 tonnes from 21, 7 tonnes last year while the decline among the large-scale producers was only marginal, totaling 10,1 tonnes last year from 11,5 tonnes in 2018.
SARW said analysts attribute ‘reduced deliveries to Fidelity were mainly as a result of lower volumes received from artisanal miners who may have smuggled most of their production amid reservations over the portion they get paid in US dollars’.
On the involvement of political elites, it said some were actively financing operations and take advantage of this to dominate the sector, influence major marketing decisions and ultimately undermine government efforts to formalize.
SARW said these elites dominate the sector in terms of their share of proceeds, making them powerful actors with influence over government policy because they finance mining operations of artisanal miners.
“While the main stumbling block towards formalization seems to be lack of political will among policy-makers (much rhetoric but no action), there is general agreement across Zimbabwean society that ASGM is now a key part of Zimbabwe’s economy, and that something needs to be done to address the many challenges facing the sector.
“…senior politicians in the ruling Zimbabwe African National Union Patriotic Front (ZANU PF) political party were reluctant to support the formalization of the sector as this could prejudice them financially by exposing their involvement in illicit financial transactions linked to the illegal trade of gold,
“Among this group are people who are undermining government efforts towards formalization, because it would threaten their economic interests if the status quo were to change.
“…Zimbabwe’s ASGM sector…is no longer dominated by poorly resourced people looking for alternative livelihoods, but by so called “sponsors” (politicians, senior police and army officers, businessmen, and increasingly by Chinese investors) who are financing ASGM activities and thus contributing to its dramatic growth,” read part of the report.
Lead researcher Veronica Zano, told a virtual meeting organized by the Zimbabwe Environmental Law Association (ZELA) that there is need for more nuanced research to guide inclusive policy formulation.
Currently, according to the SARW study, already there is defacto formalization which needs to be extended beyond policy pronouncement, taking advantage of the efforts of miners to organize themselves into syndicates.
“Since ASGM is often underpinned by undemocratic access to resource rents, formalization can create a conducive environment for poorly resourced artisanal miners to gain access to mine claims and escape exploitative labor arrangements.
“The study provides a nuanced understanding of how ASGM is structured (in terms of social organisations and labor arrangements), deep structural factors that have inhibited formalization of the sector, its current contribution to different levels of the economy, and how it can be formalized to enhance its contribution to broad-based socio-economic development in Zimbabwe.
“Zimbabwe must utilize international mining frameworks such as the Africa Mining Vision and its implementation tool the Africa: Minerals Governance Framework and The Minamata Convention on Mercury as a way of demonstrating its commitment to formalizing the sector and challenges.
“The fact that the government is now working with the ASGM sector indicates that some form of de facto formalization is already underway and should be supported through the provision of legal instruments.
“Increasing numbers of people are turning to ASGM as a means of seeking a livelihood, impelled by the growing economic crisis and decreasing rural livelihoods in agriculture due to climate change impacts (characterized by droughts and floods)
“In Zimbabwe, ASGM is no longer a peripheral economic activity, but has become a major source of gold production, surpassing the gold deliveries of large-scale mining operations. In 2018, gold deliveries from the ASGM sector exceeded those from large-scale producers, demonstrating the centrality of ASGM to Zimbabwe’s economy,” said SARW.
