Hard-pressed small scale chrome miners cry over MMCZ pricing system
SMALL scale chrome miners have urged the Minerals Marketing Corporation of Zimbabwe (MMCZ) to align its pricing system with global trends.
Miners in the sector have singled out pricing by MMCZ as a major undoing to their operations.
Zimbabwe Miners Federation (ZMF) Chrome Representative Masango Mahlahla said since MMCZ decided to price the commodity above the global market prices, they has been a drop in production across the sector.
“Production has dropped since the decision was made this year to hold process above global market price,” Mahlahla said.
According to statistics, currently the chrome exports have risen from 405 000 tonnes in the first half of 2018 leading MMCZ to state that they expect to reach 1 million tonne exports.
“This number, although good on the surface, is very misleading as it does not indicate who is exporting the chrome.
“Because MMCZ is not implementing its mandate to regulate prices domestically, smelters are taking advantage of the closed export market to offer the lowest prices possible on the domestic market and then using their export license to export the chrome,” he said.
Small scale miners are accusing MMCZ for not implementing the pricing model which was negotiated with buyers.
Mahlahla retorts, “Instead MMCZ bases all prices on prior contracts not taking into consideration the movement of the market especially in the current downturn.”
Chrome miners have since noted that MMCZ pricing chrome ore are well above international market prices which in turn deter buyers from buying chrome ore from small scale chrome producers.
“With an unregulated domestic market leaving no options available to the chrome miner who are then falling prey to the predatory buying practices of the smelters and their buying agents in the bush,” he fumed.
Small scale miners contend that in ignoring distribution costs in the pricing strategy, Zimbabwe Chrome Miners are isolated and preventing exports.
“By remaining priced above South African chrome, Zimbabwe with highest distribution costs (transport) is not a viable trade option for global buyers as companies would incur losses attempting to purchase and move the chrome out of Zimbabwe,’’ Mahlahla noted.
MMCZ has been accused of seeking direct sales to the few smelters who are able to pay the highest price possible as opposed to letting the global commodities set the price.
If the pricing system is not changed, small scale miners have argued that regardless of the market condition at the MMCZ, there will always be too few buyers operating in Zimbabwe’s Chrome ore market.
The greatest downturn Mahlahla opined, is that “export sales will never reach the billion dollar mark; Zimbabwe has the world’s second largest chrome ore deposits and has the potential to generate over a billion dollars in export revenue.”
The majority of small scale miners in the sector rely on sales to capitalise operations are failing to invest in efficiency thereby stifling growth under the present situation.
Meanwhile, the miners have said there is need for competition in terms of multiple buyers as well as sellers as well as the need for government regulation to ensure open distribution of information.