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SADC summit should address mineral resource question

15 Aug 2014 at 07:23hrs | Views
SADC Summit should address where the bloc's gold and other valuable minerals are - and who really owns them?

Southern Africa Development Corporation (SADC) should use its Victoria Falls Summit to seriously rethink its primary reliance on Western and Asian capital for the purposes of investment opting for the maximisation of its rich mineral resources.

It is an open secret that some minerals such as gold today have become that guarantee for national sovereignty. The mineral's strength in the international financial community is second to none.

This becomes more important now in the back drop of the US Africa leadership summit in which the American superpower successfully choreographed a backward African continent in dire need of assistance informing Washington's mockery US$33 billion pledge as "investment" money. The amount contrasted to the minerals being pilfered from the African continent by the US alone is just but pittance and an insult to the intellect of Africans.

The pledge was announced by the US President Barack Obama to about 50 heads of State and government who converged in Washington DC for the US Africa leadership summit.

The US President also pledged US$300 million in assistance per year to expand the reach of Power Africa in pursuit of a new, aggregate goal of 30 000 MW. He said Power Africa had now mobilised more than US$26 billion and would be looking at making electricity available in rural areas.

President Obama also announced US$7 billion in new financing under the Doing Business in Africa Campaign that would support US trade with, investment in Africa over the next two years.

The Standard of August 10 to 16 claims that, "Presidents like South Africa's Jacob Zuma, Jakaya Kikwete of Tanzania and those of Gambia and Senegal asked for equal benefit in investments."

If each of the 50 African states were to receive equal share from the US$33 billion, this would translate to about US$660 million per nation.

Which SADC member state needs the paltry US$660 million, if what is obtaining in our economies is anything to go by? Is it financial assistance that SADC and Africa as a whole needs or an overhaul of their economic structures. To give more insights to this debate let us walk through some of SADC's three nations looking at their mineral economies.

According to the latest Tax Statistics report, produced by the South African Treasury and the South African Revenue Service from 2010 to 2011, diamond-producing companies paid South Africa's government just $11 million in mining royalties. Yet in 2011, South Africa produced diamonds whose uncut, or rough, value was $1.73 billion, or 12 percent of global production, according to the most recent government data available.

Relatedly,  from 2005 to 2012, diamond exporters, primarily De Beers, appear to have downplayed the market value of their rough diamond exports by $3 billion, according to an analysis* of declarations in corporate filings under the Kimberley Process Certification Scheme, the rough diamond tracking system used to keep conflict gems off the world market. The same undervalued gems were then sold at market prices around the world.

In 2002, the American Gem Trade Association chose Tanzanite as a December birthstone, the first change to their birthstone list since 1912. According to Lyimo (2009) Tanzania exports 80% of tanzanite to US. It is a $500 million a year industry although Tanzania gets barely $20 million annually, with the lion‟s share going to Indian and American dealers.

A 2008 report by the Business & Human Rights Resource Centre estimated that the combined loss to the country over the previous seven years as a result of low royalty rates, unpaid corporation taxes and tax evasion by major gold mines amounted to US$400million (Research and Markets: Tanzania Mining Report Q1 ,2010).

In May 2013, Zimbabwe was reportedly losing over US$50 million worth of gold every month to smuggling activities, according to the Minerals Marketing Corporation of Zimbabwe (MMCZ). Recent media reports have reviewed the value of the lost gold per month to US$100 million.

At the time former MMCZ director, Tendai Munyoro said the biggest problem with gold smuggling in the country was the absence of Fidelity Printers as a regulator and as a buyer. The major gold mining companies in Zimbabwe are owned by the Canadians, meaning that Zimbabwe has partly transferred its guarantee for national sovereignty to the former.

By and large the three nations just give a snap shot of what could be transpiring in the whole region.

If I were the organiser of the pending Victoria Falls Summit as a precursor to the proceedings would be a must watch video by all heads of the state of the documentary, The Secret World of Gold.

The documentary moves from historical shipwrecks to Nazi 'death gold' and England's war chest to recent years where widespread economic uncertainty has given the yellow metal a "new luster in the world of high finance." Valued "for its permanence, beauty and scarcity, people will lie, cheat, steal and kill in the name of gold; and the clip provides colour on many of the market manipulations of the last few years."

It is evident that the SADC bloc has huge deposits of gold, a mineral that has become the ultimate guarantee of survival. In the international financial community the yellow metal's strength cannot be questioned. It therefore boggles the mind why African leaders would want to trample or even kill and sell out for a meagre US$33 billion pledge.

The Victoria Falls Summit at its closing ceremony should be in a position to give answers to its populace as to where the bloc's gold and other valuable minerals are - and who really owns them?

Source - Tawanda Museve
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