The cash-strapped government has moved to militarise mining operations, a move it hopes will plug leakages of minerals while also improving revenue accruing to government, in a desperate attempt to raise cash.
Zimbabwe is facing serious liquidity problems, which have resulted in many companies either downsizing or shutting down. This has decreased the government’s revenue base.
With no prospects of revenue collections increasing, the government and security agents have been forced to “think outside the box” to raise funds. One such move is an attempt to harness as much cash as possible from the mining sector.
A senior official in the ministry of mines and mining development revealed that over the past two weeks detectives from the criminal investigations department’s minerals unit, army personnel, intelligence officers and officials from the Zimbabwe Revenue Authority (Zimra) and Fidelity Printers and Refiners, which is an arm of the Reserve Bank of Zimbabwe, have been deployed at mines and stamping mills to plug leakages.
In addition, security personnel have been deployed at the head office of the ministry of mines to monitor operations. The security personnel have apparently been appointed in place of civilian officials, who are being deployed elsewhere.
Government sources told the Mail & Guardian that the Joint Operations Command – a body that brings together Zimbabwe’s security chiefs from the army, police and intelligence – came up with the suggestion in December, but it is only being implemented now.
‘Short-changed of revenue’
The Joint Operations Command considers the cash flow problems in Zimbabwe a security threat, hence its intervention. The cash flow problems have also resulted in the ministry of finance cracking the whip at private companies.
“The general feeling is that most mining companies are under-declaring what they are getting and the result is that the government is being short-changed of revenue,” said the ministry official.
“As we speak, the ministry is being militarised after security agents resolved that civilians were failing to stem mineral leakages which are starving the treasury of much-needed funds.
“They have replaced the mining commissioners with army and intelligence people. The chief mining commissioner, Fredson Mabhena, is actually on leave as we speak, pending redeployment to other sectors of the civil service, a fate which has befallen other ministry officials.”
Mabhena did not respond to calls.
Cash flow challenges
Another official, also at the mines ministry sources, confirmed that the government is looking for solutions in the face of mounting cash flow challenges, which have seen it failing to pay civil servants timeously.
At the mines, security officials are monitoring the entire process, from the mining of ore to the refining and even sale of the gold.
The deployment has been done countrywide, although heavier military presence has been reported at gold mines, including at small-scale mines, of which there are several, especially in Matabeleland North and Matabeleland South provinces.
The miners are being forced to sell their gold to Fidelity Printers and Refineries. It is an unpopular move, because many miners were selling the mineral on the black market, where it fetched higher prices. The miners are selling the gold at $32 a gram to Fidelity although a gram fetches about $40 on the black market.
“What is happening is that people have been under-declaring their gold output, because Reserve Bank of Zimbabwe (RBZ) prices are significantly lower than those obtained on the world market and even on the black market,” said a mine owner, speaking on condition of anonymity.
“This has resulted in the deployment of police details to mines and milling centres to ensure that every output is accounted for. The deployment has escalated in the past two weeks, and obviously the RBZ is realising more deliveries than before,” said the mine owner.
Caught at borders
Trynos Nkomo, Zimbabwe Miners Federation president, confirmed the development.
“From what I understand, the police and other security agents are on the ground to establish the levels of production when they are monitoring. They want to compare these levels with production levels when there is no monitoring,” said Nkomo.
“This is a result of people being caught at our borders with minerals, especially gold, so the aim is to plug leakages.”
Nkomo said security personnel had been deployed even at small stamp mills, but suggested that they needed to deal with the “big fish” if they were serious about plugging leakages.
“The small-scale miners can’t smuggle gold and other minerals because they do not have the resources and connections. It is the ‘big fish’ who are buying from illegal gold miners and small-scale miners and smuggling the minerals. That is where the focus should be,” he said.
“In addition, the government should be empowering small-scale miners by assisting them with the provision of equipment so that they can increase production, instead of wasting resources by stationing police officers at mines and stamp mills.”
The deputy minister of mines, Fred Moyo, confirmed that the ministry had embarked on an “operation” with the security forces, though he said he did not have exact details.
“We have only started now, but I do not have feedback. I cannot comment much because I will have to first check with our administration staff in the ministry,” he said.
He was evasive on the issue of redeployment of civilian officials to make way for security sector personnel, only saying: “No, I do not think so. I do not think that is happening.”
Mines Minister Walter Chidhakwa did not answer his phone.
The police’s spokesperson, Charity Charamba, said: “I need to find out about that,” before hanging up her phone.
The militarisation of the mining sector comes at a time when Zimra has marginally failed to meet its target for the first half of this year.
Zimra commissioner general Gershem Pasi this week said his organisation had raised $1.72-billion against a target of $1.74-billion.
Pasi said individual tax, tax on domestic dividends and interest, value added tax on local sales, value added tax on imports, customs duty, excise duty and other indirect taxes were likely to remain subdued owing to the liquidity constraints in the country.
In recent months, Zimra has been garnishing company bank accounts to raise cash in line with a directive from the government. Pasi warned that the authority would continue with the unpopular move, which economists and parliamentarians have condemned.
In a desperate bid to raise cash Zimra has also descended on vendors and flea market operators. The authority wants vendors to register so that they are also taxed, a move vendors are firmly resisting.“This is a result of people being caught at our borders with minerals, especially gold, so the aim is to plug leakages.”