Formalising Zimbabwe’s Artisanal Mining Sector

As dawn breaks and the sun paints the horizon crimson and orange, a group of dishevelled men trudge up from the Mutare river’s bank carrying picks and crow-bars. Their muddy limbs and toothy grins are proof that their hard toiling in the ice cold water during the early hours of the day have been fruitful. These are the Artisanal Miners or Amakorokoza.

 

They are criminals to the Government, bringers of all manner of social ills to the locals, rapers of Mother Nature to environmentalists and social outcasts to just about everyone else. Artisanal miners are little understood by most people.

Artisanal mining is defined by Hentschel et al as mining by individuals, groups, families or cooperatives with minimal or no mechanization. An estimated 13 – 20 million men, women, and children from over 50 developing countries are directly engaged in the artisanal mining sector (Darby and Lempa, 2006). A further 80 – 100 million people are affected by artisanal mining activities. 500 000 people are directly involved in artisanal mining in Zimbabwe with over 150 000 of them being children and women. Up to 2 million people are affected by artisanal mining in Zimbabwe. These people are mostly involved in the extraction of gold, diamonds, tantalite and chrome.

Artisanal mining is defined as mining by individuals, groups, families or cooperatives with minimal or no mechanization (Hentschel, Hruschka and Priester, 2003).  Artisanal mining activities can be as simple as panning for gold in a river, to as complex as developing underground workings.

All forms of artisanal mining are illegal in Zimbabwe. However this has not always been the case. In 1991, Parliament gazetted Statutory Instrument 275, the Mining (Alluvial Gold) (Public Streams) Regulations as a measure to recognize gold panning and incorporate it in national development policies. This statutory instrument allowed Rural District Councils (RDCs) to apply for special grants for particular streams from the Secretary in the Ministry of Mines and Mining Development or a Mining Commissioner who would consult with the Department of Natural Resources (Section 3 paragraphs 2 and 3). After acquiring the grant, the RDC would demarcate a public stream into 50 meter-sections for ‘approved’ local persons, cooperatives and partnerships in consultation with the Mining Commissioner. The regulations also outlined and specified where panning is legally permitted, and prohibited panners from mining in an environmentally degrading manner. In essence they stated that no mining should be carried out within 3 metres of the riverbank and they should not be deeper than 1.5metres. However this Statutory Instrument was repealed with the effect of making gold panning, which constitutes 90% of artisanal mining activities, an illegal activity.

In the past, Zimbabwe had gone down the right path by creating the Gold Mining and Minerals Development Trust. The Trust was created by the Reserve Bank of Zimbabwe (RBZ) in 2001 as a corporate body mandated to promote and develop environmentally friendly exploitation of minerals and tasked with buying gold from artisanal and small-scale miners in order to curb the illegal trade in the mineral. However the trust became defunct in July 2004 due to a lack of funding from the RBZ.

Both the government and the artisanal miners incur a high cost due to the informality and illegality of artisanal mining. For the government, the proliferation of artisanal mining activities shows a lack of respect for its laws. This blights the Government’s reputation and discourages large-scale mining investors. The government also loses potential royalty and tax revenue that could have been collected from the artisanal miners.

Artisanal miners on the other hand cannot obtain administrative, financial and technical assistance from the government and they cannot sell their minerals through the Reserve Bank or Minerals Marketing Corporation of Zimbabwe. They are forced to sell their minerals on the black market where they are underpaid and even swindled.

Due to a lack of government recognition and a lack of incentive for the artisanal miners to operate in an environmentally friendly manner, artisanal activities result in serious environmental degradation as evidenced by water contamination with heavy metals like mercury and cyanide, deforestation, soil erosion, sedimentation of reservoirs and water pollution as populations increase without provision of sanitation.

While the Government sees artisanal miners as a problem, they themselves face problems of their own. They work on low-value ore-bodies while using labour intensive equipment and inefficient processing techniques which result in very low recoveries. They lack adequate geological knowledge of the ore-bodies and do not possess adequate mining skills. They have very little knowledge of the economic principles that govern the extraction industry and as a result their operations are run on a ‘Gambler Mentality’. Due to the illegality of their operations, artisanal miners cannot access official markets and depend on intermediary traders. Their minerals are also deemed unattractive by fair trade organizations due to their environmentally degrading activities. They face the constant risk of being arrested too. In essence artisanal miners face many risks and challenges only to make less money than the people they sell their minerals to. Not only are they at the risk of rock-falls, shaft collapses, water-borne diseases, animal attacks and injury, they also fall victim to turf wars and harassment from peers.

Women, who constitute 30% of artisanal miners also face some gender-specific challenges. They are harassed by male counterparts including gold dealers in the sector. Although all artisanal miners suffer police arrests, the women’s situation is worse in that because of the family care roles they play, they are sometimes forced to negotiate for ‘lighter’ charges outside the law. This is perpetuated by structural inequalities and stereotypes that discriminate against women, especially the misconception that the mining sector is a preserve of men.

In order to formulate a policy that will be accepted by the artisanal miners, it is important to understand why artisanal miners still operated illegally when SI 275 was still in force. Artisanal miners lacked knowledge of SI 275 and the Mines and Minerals Act. SI 275 was also specific to alluvial gold panning activities and did not regulate artisanal gold reef mining and artisanal mining of other minerals such as diamonds, tantalite and chromite. The RDCs themselves showed ‘limited’ enthusiasm to apply for special grants partly due to the lack of knowledge about long-term benefits of monitoring panning activities. Some artisanal activities took place on communal farm-land or mining claims belonging to large corporations thus the artisanal miners would have faced land rights issues in trying to obtain claims. The government also provided very little incentive for the miners to operate legally. The gold panners also knew they could easily evade arrest through bribery. Many artisanal miners are nomadic or seasonal miners and did not want to make a full-time commitment.

In light of this and as part of the drive to indigenize the economy and empower the Zimbabwean people it is imperative that the artisanal mining sector be formalized. Formalizing should not just be an issue of legalizing artisanal mining but also of creating a good business model, ensuring sustainability and social acceptance of the activity. For formalization to succeed the costs and risks associated with a formal artisanal mining sector should be lower than the costs and risks associated with the current informal and illegal scenario. Costs incurred by the government will include financial and human resources .while artisanal miners will have to pay administrative fees, royalties, corporate taxes and surface rents.

The objectives of formalizing are to ensure that a win-win scenario is created for both miners and the government, to achieve good governance as artisanal miners respect the rule of the law. Transparency of mineral production and downstream minerals trade will be achieved while the government gets to control the sector and ensure that social and environmental requirements are met. Another objective is for the government to generate revenue through royalties, surface rents and taxes.

Formalization should be based on four strategic pillars. The first is to alleviate poverty: most artisanal mining activities take place in poverty stricken rural areas which rely on subsistence farming and cattle rearing. Artisanal mining has the potential to add to the local economic development. Government, through the MMCZ and Reserve Bank should create a fair market that will buy the minerals at fair value and give artisanal miners the opportunity to participate fully in the rest of the economy and thus enhance the overall multiplier effects on the local economy.

The second pillar is to create a good business climate that is attractive to artisanal miners by providing incentives and extension services through the departments of the Ministry of Mines. Artisanal miners will be expected to abide with environmental and operational regulations in return. Miners must receive services such as training in new methods and links to new technology and financing opportunities in return for their tax payments.

The third pillar is to ensure sustainability through environmental and occupational health management to mitigate risks to the poor. The fourth is the stabilization of government revenues from the artisanal mining by sustainably managing mining taxation revenues and promoting opportunities for adding value to mineral production in the country while ensuring minerals are not traded through the black market.

The process of formalizing the artisanal mining sector should follow certain steps. The first of these is to legalize artisanal mining by drawing up a ministerial policy on artisanal mining (or including it in the National Minerals Policy) which will be used as a guideline by law-makers in legalizing all forms of artisanal mining within environmentally sustainable bounds. Once the law is in place it is important that it be administered in a decentralized, transparent and efficient manner.  The government should efficient implement the law by providing adequate human, financial and material resources.

Before artisanal miners can be granted mining titles environmental and social impact assessments should be carried out. Artisanal miners face social stigma due to the criminality, invasiveness and environmentally degrading effects of their work. In a mineral rush, many artisanal miners descend on an area leading to an increase in thefts, prostitution, diseases and environmental degradation. The locals feel the land is theirs and so too the minerals resulting in clashes and turf wars.  The assessments should the areas to be mine and the nearby communities. For a formal artisanal mining sector to flourish it is important that the surrounding communities be involved and consulted.

The artisanal mining sector should be incentivized. Artisanal mining is a profit-motivated activity and if there are no economic benefits to operating legally, miners will continue to operate illegally. There must be economic incentives for miners to operate legally. These incentives can be either direct or indirect. Direct incentives include access to finance and direct subsidies while indirect incentives include tax and technical assistance. Additionally artisanal miners will be able to use formal markets, formal banking systems and the legality of the operations as a marketing argument with fair trade organizations

Finally artisanal miners should be well organized in unions, cooperatives and partnerships to secure their titles, attract investment and obtain loans. Government should then avail mining technologies and specialized mining services to the artisanal miners.. It is important that the government and the miners decide on what organizational form will best suit the Artisanal mining sector. The smaller the organizational units, the more the mining titles the Government has to give leading to slower processing times and inefficiency. The larger the units, the better their chances of attracting investment, obtaining loans and getting technical assistance from the government.

The majority of artisanal miners are involved in gold panning along Zimbabwe’s rivers. Some gold panners work through-out the year while others are farmers who only pan for gold during the dry season. They use metal dishes and make-shift James Tables to obtain the gold. They sell their gold to ‘runners’ or middle-men who buy the gold on behalf of the black market traders who either smuggle the gold out of the country, or sell it to Fidelity Printers as their own mine’s output using their mining licences.

Zimbabwe’s 400 000 gold panners produce an estimated 1 500kg of gold a year, (10% of the country’s total gold output) which has a value of US$ 63.3 million at current gold prices. Most of this illegally mined gold is illegally traded and as result the Government does not generate any revenue off it.

On average, gold panners receive 60% of the market price of the gold. However they remain in a vicious cycle of poverty while the ‘runners’ and their bosses get rich without breaking a sweat. This is because while there are 400 000 gold panners countrywide, there are about 5 000 ‘runners’ and less than 500 people who actually sell gold outside the country. Because of this artisanal miners make far less money per capita than the runners and dealers. Government, through ZIMRA charges a royalty of 7% on gold. By formalizing the gold panning sector effectively and thus eliminating the black market, ZIMRA will be able to collect US$4.5 million annually from royalties paid by the gold panners alone.

With this money government can ensure the sustainable development of the mining communities by providing them with schools, health facilities, tarred roads, dams and mining and agricultural extension services that will develop and diversify the local economy.