IN a post-budget seminar held by the Parliament of Zimbabwe last year, National Assembly speaker Jacob Mudenda shocked MPs when he told them that the national budget can surpass the $10 billion mark on gold and chrome receipts alone.
BY TATIRA ZWINOIRA
Mudenda made the remarks to emphasise the potential of the country’s mineral wealth.
While no concrete geological surveys have been done, initial studies by the Ministry of Mines and Mining Development found that Zimbabwe was endowed with over 40 different minerals.
Despite the potential, the mining sector has remained less diversified with mineral activities predominantly concentrated on six key mineral categories, namely, gold, platinum group metals, diamonds, nickel, chrome and coal accounting for 97% of the value of minerals generated in 2017.
“Without talking about being under-explored or talking about the missing $15 billion (diamond revenue) though that needs to be substantiated, what we know is that the current resource, if it is exploited fully, we can reach those numbers ($18 billon mining sector per annum) very easily,” Chamber of Mines of Zimbabwe (CoMZ) CEO Isaac Kwesu told Standardbusiness at the just-ended Zimbabwe Mining Investment Conference.
“In fact, in 2011 the World Bank had said by 2018 we must be at $18 billion but the assumption was based on changing the operating the landscape to attract new investment.
“The resource underground that is known is worth far more than that ($18 billion) in annual exploitation, so if you produce annually you can get those numbers easily. But, as I have said, you need capital.”
Capital was the main theme of the Zimbabwe Mining Investment Conference 2018 held in Harare last week.
The conference was organised by United Kingdom-based mining consultancy firm Mining Report and CoMZ with support from government.
It was facilitated by a local outfit, Coordinate ZW, a private and corporate event planning and co-ordination company.
The conference was organised to seek capital to increase the mining sector’s contribution to the gross domestic product (GDP), which currently sits at 12% or nearly $2 billion.
It revealed that the sector requires $7 billion capital injection spread across the major minerals with gold needing $800 million, platinum ($3 billion), diamonds ($500 million), nickel ($220 million), chrome ($410 million), coal ($300 million), lithium ($250 million), asbestos ($150 million), iron and steel ($800 million) and other remaining minerals ($570 million).
This investment has the potential of increasing the output for gold to 45 tonnes per annum, platinum (28 tonnes), diamonds (seven million carats), nickel (30 000 tonnes), chrome (eight million tonnes) and coal (10 million tonnes).
Based on the latest global commodity prices, the minerals generate well over $20 billion annually.
“The country’s mineral potential can be unlocked by attracting adequate capital in the mining industry.
“A competitive regulatory and operating environment is key in driving mining sector growth and development,” Kwesu said.
According to the 2017 Mining Industry Survey Report, the mining sector is also beset by constraints in electricity supply, high cost of electricity, low feedstock and low commodity prices as well as foreign payment delays.
Victor Tskhovrebov, managing director of Russian-linked company Liberation Mining Pvt Limited, told our sister paper NewsDay that Zimbabwe was the least attractive of all the countries they had invested in.
He described the country’s attractiveness as being “slightly down from the middle” despite having serious potential.
Tskhovrebov referred to regulation, foreign currency constraints and a poor transport system as serious impediments.
Liberation Mining came in last year and invested $10 million into coal mining. The company said if the challenges were addressed, it would be able to produce up to 50 million tonnes of coal per annum from the current capacity of 1,5 to two million.
Australian company Prospect Resources Limited is working on a lithium project in Arcadia, 35km east of Harare, which needs millions of dollars in investment and has a lifespan of more than 20 years.
The company came in 2016 and has since been working on establishing the project, which will see output of 26 000 tonnes per annum.
This was in response to growing demand for electric cars where lithium is a major raw material. Demand in battery capacity for these vehicles is expected to grow to 2 319 gigawatt hours [GWH] by 2040 from the current 17GWh.
While Prospect Resources Limited has been greatly assisted by government, the company’s executive director Duncan Greaves raised concern over the cost of doing business.
Experts say Zimbabwe is expensive to do business and this outweighs potential gains to be made by charging high prices to recoup costs as this would ultimately make them uncompetitive globally.
Zimplats CEO Alex Mhembere admitted to having struggled in doing business over the years and noted investors had to be constantly engaging to get things done.
“We have travelled the road and what has been challenging is largely capital, skills and regulatory framework in the country,” he said.
“These caused a number of challenges over the years, but I am happy to say that we hold our own.”
RioZim CEO Bhekinkosi Nkomo said while they may be the largest gold producer in the country, comparatively in the region they were the lowest.
“I would love to see the list from the Chamber of Mines which classifies us as a large-scale producer because in the context of the region we are still a small-scale producer,” he said.
“I say this with respect to all my other colleagues who are in gold mining.
“Gold is a big foreign currency generator, but I feel there is scope to scale up our operations to the levels of world-class gold producers.”
Mining executives say fixing concerns raised by local and foreign mining players would go a long way in improving the country’s exploitation of minerals.