Zimbabwe - Mining and Minerals
Zimbabwe's wide range of natural resources made agriculture and mining the main pillars of the economy. Agriculture and industry account for about 17% and 29% of gross domestic product (GDP), respectively. Zimbabwe has an important percentage of the world's known reserves of metallurgical-grade chromite. Other commercial mineral deposits include coal, platinum, asbestos, copper, nickel, gold, and iron ore. In order to develop these mineral deposits, Zimbabwe relies on foreign investment.
Gold production, another former key foreign currency source, has also slumped. In 2009, the country produced only 4.2 tons of gold. Poor government management has exacerbated meager corn harvests in years of drought or floods, resulting in significant food shortfalls every year since 2001.
Zimbabwe's mineral-rich Great Dyke has four major platinum complexes that constitute the world's second largest platinum reserves: At its southern tip, near Zvishavane, is the Wedza Complex, where Impala Platinum (Implats) and Aquarius Platinum jointly operate the Mimosa mine; north of the Wedza Complex, near Shurugwi, is the Selukwe Complex where Anglo American and Central African Mining & Exploration Company (CAMEC) have claims not yet in production; further north, about an hour west/southwest of Harare, is the Hartley Complex dominated by Zimbabwe Platinum Mines (Zimplats); and at the far northern tip of the Great Dyke is the undeveloped Musengezi Complex at Snakeshead, controlled by African Consolidated Resources (ACR).
Platinum group metals (PGM), predominantly platinum, made up two thirds of Zimbabwe's mineral exports in 2008 and one third of the country's total exports (excluding gold in both cases). Alex Mhembere, CEO of Zimbabwe Platinum Mines Ltd (Zimplats), told econoff on February 9 that Zimplats exported US$294 million in PGM in 2008 from its Ngezi mine in the Hartley Complex. The Mimosa mine in the Wedza Complex is Zimbabwe's second of two PGM producers. It exported about US$250 million worth of minerals last year, according to Fungai Makoni, Mimosa's General Manager for Finance. The Reserve Bank of Zimbabwe reported in its January 2009 Monetary Policy Statement (Ref B) that the minerals sector (excluding gold) contributed 51 percent to Zimbabwe's total exports of US$1.6 billion in 2008. From these numbers we derived PGM's contribution to exports. Zimplats anticipates doubling its 2008 ore production of 2.1 QZimplats anticipates doubling its 2008 ore production of 2.1 million MT by July 2009 once a new concentrator comes on stream in May 2009, and doubling platinum production by June 2010.
Zimbabwe's second largest platinum reserves in the world have the potential to earn the beleaguered economy huge foreign exchange returns. Yet the GOZ frightens away serious investment by threatening reputable players, mineral rights and breaching contractual agreements. On top of that, in characteristically short-term thinking, it apparently has sold the platinum claims wrenched from major international investors to asset speculators, including Mugabe himself. Cleaning up the minerals sector would go a long way toward stabilizing Zimbabwe's economy.
President Mugabe and other politicians have in the past threatened to target the mining and manufacturing sectors for similar forced indigenization. In 2008, the government amended the Mines and Minerals Act, outlining indigenization requirements for mining. For strategic energy minerals (coal, methane, uranium), the legislation required mining companies engaged in extraction or exploitation to transfer ownership to the state of 51 percent of the shares; 25 percent would be without compensation. The 2008 legislation directs a transfer of 25 percent of the shares in precious metals and precious stones to the state without compensation and a further 26 percent to the state or to indigenous Zimbabweans.
The government deliberated amendments to the Mines and Minerals Act, which may include a “use it or lose it” provision for unexploited mining concessions and new “indigenous” ownership requirements in the sector in line with the Indigenization Act. In addition, the government intends to amend the provisions of the Precious Stones Trade Act relevant to diamonds to enforce, among other things, 100 percent government ownership of all alluvial diamonds in the ground, immediate separation of diamond mining and marketing activities, and the promotion of value addition through the prohibition of exports of unpolished diamonds.
|
NEWSLETTER
|
| Join the GlobalSecurity.org mailing list |
|
|
|
