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Victoria Falls - The World Bank says Zimbabwe will unlock between US$5bn and $15bn in mining investment potential by 2018, but only if President Robert Mugabe's government addresses the regulatory, operational uncertainty and infrastructure bottlenecks that are holding back growth in the sector.
Zimbabwe - with the world’s second-largest platinum reserves and vast deposits of other minerals such as gold, coal, nickel and chrome - has cast its eyes on the mining sector for increased contribution to state revenues.
But this is constraining mining companies, which have complained of high taxes and uncompetitive royalties and other mining fees.
Dr Sidwell Hove, a senior executive at the World Bank office in Zimbabwe, told mining executives at a Victoria Falls mining conference on Friday that the country’s mining sector had huge “potential” for growth, but only if “policies to promote mining development” are put in place.
“For 2014, we project 3.3% growth. However, the sector is vulnerable to commodity price fluctuations… production is still below potential,” said Hove.
He said if Zimbabwe improved its investment climate and operating environment, the country would attract up to $15bn in mining investment by 2018. He gave a worst-case scenario of $5bn investment for the industry if there was no significant move to improve the country’s competitiveness.
Zimbabwean Mines and Mining Development Minister Walter Chidakwa said on Friday that the government was proposing a further 3% levy to contribute towards a government exploration company.
He also confirmed to Fin24 that all diamond mining companies in the country are now required to sell their diamonds through the state, although he declined to comment further.
“We have spoken about securitisation before, but now that we are doing this you are surprised. It has started to happen but I don’t want to speak much on this in terms of who we are borrowing money from; it’s for the finance minister,” Chidakwa said.
He told delegates to the mining indaba that the indigenisation policy will be implemented under a threshold which would see 51% shareholding in mining companies assumed by local groups, and 49% of shares being retained for the foreign companies.
Zimbabwean indigenisation laws require mining companies to pay $10m into community share ownership schemes. Zimplats, a unit of Impala Platinum, has already settled payment of this obligation while Unki mine and Mimosa mine – owned by Anglo American Platinum and Aquarius Platinum respectively – are also pursuing full payment of this.
Chidakwa admitted that negotiations between the government and platinum miners for setting up a platinum refinery in Zimbabwe have not yet yielded a positive result for the government.
However, he insisted that a refinery must be set up inside the country to boost employment and enhance the value chain.
“We thought we would have a timeframe but we are now realising that there are other things emerging. A lot of value addition is already happening in most of the mining companies. All we are saying is that we want more.”
Miners not happy with 5% wage hike
Hove said there was a “trust deficit” between the mining industry in Zimbabwe and the government. He said bottlenecks the industry was encountering as well as regulatory uncertainty and high fees “reduce the returns from mining”.
Chamber of Mines of Zimbabwe president Alex Mhembere also emphasised the need for the creation of an environment conducive to spurring production in the mining sector. He said the industry was "struggling to pay power tariffs”, a development that further affected viability.
Although most of the trust deficit has between the miners and the government, Mhembere said there were also demands for more wages by mineworkers. Reports say mineworkers in Zimbabwe are not happy with the 5% wage increase granted by the Chamber of Mines.
“There has been clamouring for higher wages. The 5% wage increase that was instituted is way above the inflation factor… it is through production efficiencies and increased productivity that the industry will be able to pay higher prices,” said Mhembere.
- Fin24
Zimbabwe - with the world’s second-largest platinum reserves and vast deposits of other minerals such as gold, coal, nickel and chrome - has cast its eyes on the mining sector for increased contribution to state revenues.
But this is constraining mining companies, which have complained of high taxes and uncompetitive royalties and other mining fees.
Dr Sidwell Hove, a senior executive at the World Bank office in Zimbabwe, told mining executives at a Victoria Falls mining conference on Friday that the country’s mining sector had huge “potential” for growth, but only if “policies to promote mining development” are put in place.
“For 2014, we project 3.3% growth. However, the sector is vulnerable to commodity price fluctuations… production is still below potential,” said Hove.
He said if Zimbabwe improved its investment climate and operating environment, the country would attract up to $15bn in mining investment by 2018. He gave a worst-case scenario of $5bn investment for the industry if there was no significant move to improve the country’s competitiveness.
Zimbabwean Mines and Mining Development Minister Walter Chidakwa said on Friday that the government was proposing a further 3% levy to contribute towards a government exploration company.
He also confirmed to Fin24 that all diamond mining companies in the country are now required to sell their diamonds through the state, although he declined to comment further.
“We have spoken about securitisation before, but now that we are doing this you are surprised. It has started to happen but I don’t want to speak much on this in terms of who we are borrowing money from; it’s for the finance minister,” Chidakwa said.
He told delegates to the mining indaba that the indigenisation policy will be implemented under a threshold which would see 51% shareholding in mining companies assumed by local groups, and 49% of shares being retained for the foreign companies.
Zimbabwean indigenisation laws require mining companies to pay $10m into community share ownership schemes. Zimplats, a unit of Impala Platinum, has already settled payment of this obligation while Unki mine and Mimosa mine – owned by Anglo American Platinum and Aquarius Platinum respectively – are also pursuing full payment of this.
Chidakwa admitted that negotiations between the government and platinum miners for setting up a platinum refinery in Zimbabwe have not yet yielded a positive result for the government.
However, he insisted that a refinery must be set up inside the country to boost employment and enhance the value chain.
“We thought we would have a timeframe but we are now realising that there are other things emerging. A lot of value addition is already happening in most of the mining companies. All we are saying is that we want more.”
Miners not happy with 5% wage hike
Hove said there was a “trust deficit” between the mining industry in Zimbabwe and the government. He said bottlenecks the industry was encountering as well as regulatory uncertainty and high fees “reduce the returns from mining”.
Chamber of Mines of Zimbabwe president Alex Mhembere also emphasised the need for the creation of an environment conducive to spurring production in the mining sector. He said the industry was "struggling to pay power tariffs”, a development that further affected viability.
Although most of the trust deficit has between the miners and the government, Mhembere said there were also demands for more wages by mineworkers. Reports say mineworkers in Zimbabwe are not happy with the 5% wage increase granted by the Chamber of Mines.
“There has been clamouring for higher wages. The 5% wage increase that was instituted is way above the inflation factor… it is through production efficiencies and increased productivity that the industry will be able to pay higher prices,” said Mhembere.
- Fin24
