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Corruption risks and vulnerabilities in the Awarding of Mining Contracts, Permits and Licenses

Corruption risks and vulnerabilities in the Awarding of Mining Contracts, Permits and Licenses

Mining is critical to Zimbabwe’s economy. Zimbabwe has a GDP of about US$15 billion and the mining sector generated revenue of US$10 billion in a recent five-year period (2010-14). However notwithstanding this potential, systemic and institutional corruption remains a major hindrance to the full contribution of mining to Zimbabwe’s socio-economic development. Transparency International Zimbabwe conducted a Mining Awards Corruption Risk Assessment (MACRA) to identify the gaps and opportunities in this sector. The MACRA focused primarily on the one award process – the claim (block of claims) for precious metals.

 

The Assessment identified systemic, regulatory and institutional vulnerabilities to corruption in awarding mining and mining-related licences, permits and contracts and assessed the specific corruption risks created by these vulnerabilities. The following structural vulnerabilities and risks were identified in the MACRA:

  • The Permanent Secretary has centralized control over public institutions regulating mining operations in Zimbabwe (chairs Mining Affairs Board, chairs Boards of State Owned Enterprises, and has assumed the powers of the Mining Commissioners). This structural set up is a huge corruption driver that is likely to lead to interference in subordinate official’s decisions and interference in the appeals process
  • There are no standard timelines for the different steps of the award process giving wide discretion to officials to manipulate the process or leak confidential applications.
  • The Mines and Minerals Act and other mining related laws may be amended to favor private interests before the public interest
  • The Ministry of Mines and Mining Development is implementing a ‘use it or lose it’ policy to forfeit claims from miners who are not currently extracting minerals from them in an opaque manner. This process can lead to expropriation of mining rights, transfer or termination of mining rights without public disclosure and stockpiling of mining licenses.
  • The Ministry of Mines and Mining Development is digitizing the cadastre in a non-transparent manner. The process of digitizing the cadastre in such a manner can lead to mining rights being expropriated.
  • State owned mining entities do not implement any remedial actions recommended by Parliament and independent institutions such as the Zimbabwe Human Rights Commission and or the Office of the Auditor General

TI Z notes that while the Minerals Amendment Bill offers a fresh ray of progressive opportunity in as far as good governance of the mineral sector is concerned; the Bill also has structural vulnerabilities and may create room for corruption if allowed to pass. For instance, the bill gives powers to the Permanent Secretary of the Ministry of Mines to continue Chairing most State owned mining Companies as well as appoint his subordinates as Members of the Mining Affairs Board, an institutional arrangement which is contrary to the principles of good governance. TI Z has made these and other recommendations that aim to strengthen transparency and accountability in the awarding of mining contracts permits and licenses.