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17 Oct 11 Zimbabwe: ‘Chrome Ban to Remain’

Financial Gazette (Harare)

Shame Makoshori

12 October 2011

MINES and Mining Development Minister, Obert Mpofu, has insisted that the ban on chrome exports would remain in place, despite increasing agitation from chrome miners.

Government first imposed a chrome export ban in 2009 to stimulate value addition at chrome processors like ZimAlloys, which plans to ramp up output to 250 000 tonnes per annum from 120 000, and ZIMASCO, which had been undertaking a US$300 million expansion programme.

Mpofu had initially given chrome miners an 18-month export window following a public outcry over that embargo, but announced in April a new ban, sparking another outcry among chrome ore exporters.

Experts said this week local value addition could create at least 2 000 jobs and generate US$3,8 million in government revenue. They said at present, every 2 000 tonnes of exported chrome ore generated about US$240 000, but could bring close to US$1 million if processed.

However, local chrome ore prices recently plunged to US$40 per tonne, from US$120 per tonne before government imposed the ban in April, as local processors slashed prices in response to a glut in supplies on the domestic market.

Chrome mines said last week they had been sitting on thousands of tonnes of ore that could not be offloaded at the prevailing prices.

But Mpofu has been unrelenting.

“I want to say to my colleagues that the door has been closed, actually the door will be totally shut. I was attacked by parliamentarians. Even the principals (in the power-sharing administration) said ‘Mpofu, why are you making decisions without consulting us?’” Mpofu told a stakeholder meeting in Mutare last week.

He said he had initially given chrome exporters relief after understanding their plight to boost working capital.

The window was initially for six months, but was extended to 12 months then later 18 months.

“But the (export concession) was totally abused,” Mpofu said.

He said the extent of the abuse was extensive, with most chrome ore exporters failing to give government export records when requested to do so.

Mpofu said chrome had assumed greater prominence on the international markets where prices had been increasing in response to higher demand by the global automotive industries.

Zimbabwe would not allow the finite resource to be sold for a song, but should take advantage of the boom to export value-added chrome, he said.

In July, a Kwekwe-based chrome mining firm, Oliken Ferro-Alloys, implored government to introduce what it called a chromite value creation and marketing board (CVCMB) to deal with price distortions.

“It is hereby proposed that a strategy to improve the utilisation of Zimbabwean chromite resource be formulated and implemented for the benefit of the nation,” Oliken general manager, Trevor Ruwa, said in a presentation to the Parliamentary Portfolio Committee on Mines and Energy.

“This CVCMB initiative is meant to protect and benefit the small to medium player in the industry as well as extracting maximum benefits from our resources as the nation of Zimbabwe.

The CVCMB initiative also embodies a great potential for sanction-busting and can be used in the marketplace as a negotiating tool,” he said.

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