Workers fret as cash crunch forces gold mines to close

Labourers are deprived of wages as production declines following the Zimbabwean reserve bank's failure to pay mining firms for deliveries.

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BULAWAYO, Zimbabwe // During a recent strike at a gold mine, roads were barricaded with burning tyres and riot police had to be called in to quell the protest. The incident was not started by workers at How Mine, one of the country's largest gold producers, but by their wives, who also kept their husbands from reporting for work for two days because their salaries had not been paid.

The strike highlighted the dire working conditions at the gold mine, the result of a financial crisis that has made it impossible for bosses to pay employees. Last week, about a month after the strike, Metallon Gold, the South African-based holding company and producer of 40 per cent of Zimbabwe's gold output, closed its five mines, including How Mine, putting 3,500 jobs on the line. Mining executives estimate that up to 10 more gold mines have been shut down this year because the Reserve Bank of Zimbabwe, the sole authorised buyer of gold mined in the country, is failing to pay the mining companies for their deliveries, with arrears going back to last year.

"This has created a lot of uncertainty," said Nelson Phiri, 34, an auto electrician at How Mine, 30km south-east of Bulawayo. "I do not know whether I will have my job tomorrow or not. But I think this is a man-made crisis, which those responsible must fix." The mine closings have created a bigger crisis for mine workers, most of whom are migrant labourers, who came to Zimbabwe from Malawi and Zambia during the boom years between the 1960s and 1980s.

Because they are foreigners, they know no other homes beyond the confines of mine compounds. Marshall Banda, 46, from Malawi, hopes the mines will reopen soon before he and his family become destitute. "This has never happened since I came here in 1983," he said. "I hope this will not be the end of it because the government recognises the need to pay mines to save the industry and the jobs it provides. If that doesn't happen, where do I go from here?"

For nearly 100 years, gold mining was the core of Zimbabwe's economy. Cecil John Rhodes, who colonised the region that was eventually to become Zimbabwe, was attracted to the country in the 1890s because of the abundance of gold. Zimbabwe used to be the third-largest gold producer in Africa after South Africa and Ghana, but in recent years the sector has lost its glitter because of the world's highest inflation rate now at 230 million per cent, lack of foreign exchange, power cuts and the reserve bank's failure to remit payment to gold mining houses.

The Zimbabwe Chamber of Mines, the voice of the mining sector, said the central bank owed gold miners US$30 million (Dh110m) for deliveries made since December. "The failure by the RBZ to pay for gold delivered to it has decimated the entire gold industry," said a statement from the chamber. "The gold industry is seriously concerned by the impact this situation has had on employees and their families at a time when the country is facing social challenges. Most gold mines are now unable to meet wages and salaries for their employees."

Because of the mounting challenges, average gold production is now 267kg a year, down from 2,259kg in 1999. Some gold producers are struggling to survive and several mines have stopped production. "The industry cannot fund the working capital and development capital required to sustain operations," the statement said. Tinago Ruzive, the president of the Associated Mine Workers Union of Zimbabwe, said the social effect of the mine closings on workers and their families is immense.

"It is a sad situation," he said. "Workers have gone for several months without being paid and with the ongoing mass mine closures I do not know what the future holds for us. Recently we had a sad development when workers and their spouses at some mines held strikes over low salaries and erratic payment." At its peak, in the 1980s and 1990s, the mining sector employed 60,000 people, but the number of jobs has dropped to about 40,000. Between 70 per cent and 80 per cent of that figure are employed by gold mines. It is these jobs that are at risk.

Some former mine workers have taken to illegal gold panning in an effort to survive. They extract the mineral from mine dumps or disused mines, selling one gram for $20. "It is more profitable because in a month, depending on your luck and how you work, you can get 10 grams or more, which works out to $200. Which employer pays that much?" said Masauso Chama, who used to work at the Old Nick Mine. * The National