‘Increase beneficiation to reduce trade deficit’

01 Mar, 2022 - 00:03 0 Views
‘Increase beneficiation to reduce trade deficit’

The Herald

Tapiwanashe Mangwiro Senior Business Reporter

Zimbabwe needs to step up measures aimed at increasing the proportion of minerals that are beneficiated in the country to get better returns and address trade deficit issues.

This comes after the southern African country’s registered a significant increase in trade deficit from US$30 million in November 2021 to US$180 million in December 2021.

Zimbabwe’s mining sector is highly diversified, with close to 40 different minerals. The sector accounts for about 12 percent of the country’s gross domestic product (GDP).

The southern African country has the world’s second-largest platinum group metal (PGMs) reserves as well as billions of US dollars’ worth of copper, lithium, gold, diamond and nickel.

Broadly, an estimated 30 percent of the global mineral resource is found on the African continent yet the continent continues to lag behind in terms of global economic development and poverty eradication.

The Government is targeting to generate US$12 billion from mineral exports annually by 2023, viewed also as the major stepping stone towards attainment of upper middle income status by 2030.

Economist Dr Prosper Chitambara said, “Beneficiation and value addition of minerals before exporting is one of the key pillars of accelerating economic development.

“The major challenge to value addition has been limited incentives to lure potential investors and incentives that can encourage miners to add value to their produce locally.”

According to the  Zimbabwe National Statistics Agency (ZimStat), Zimbabwe exported 4 417 kilogrammes of semi-processed gold valued at US$248,1 million, compared to 2 455kg valued at US$139,1 million the previous month.

South Africa has imported a significant amount of unbeneficiated minerals from Zimbabwe’s, especially PGMs, in the last 20 years at a time its mines have become too deep and expensive to operate economically.

Another economic analyst Tinevimbo Shava said, “South Africa was proactive in the development of its own mining industry and focused on policies to beneficiate minerals from its own mines and regional peers in SADC such as Zimbabwe.

“South Africa’s strengths now include an extremely high level of technical and manufacturing expertise and comprehensive research and development activities. The country also boasts of world-class primary processing facilities for gold, platinum, diamond, carbon steel, stainless steel and aluminium.”

ZimStat said major minerals produced in Zimbabwe such as nickel concentrates and nickel mattes were exported in a semi-processed form, while nickel ores are exported in a raw form.

Through beneficiation, the country would cushion itself from vulnerabilities associated with any decline in world commodity prices that can affect the current major export earners such as platinum, gold, nickel and chrome.

Commodity price crashes have in recent years left various African countries such as Angola, Nigeria, Zambia, Ghana, Sierra Leone, Libya, Sudan and others with massive debts. 

This can happen to the Zimbabwean economy if tax revenues are affected by commodity price fluctuations on the world market.

Beneficiation brings massive benefits to the country such as employment creation by all enterprises in the mining value chain and growth in minerals export value which translates to increased tax returns.

Secondary benefits such as increase in domestic demand for goods and services and infrastructure development in mining towns can go without saying.

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