Zimbabwe mining could attract $16bn

Reuters | Fri, 29 May 2009 16:33
[miningmx.com] -- Zimbabwe's Prime Minister Morgan Tsvangirai said on Friday the southern African country could attract up to $16 billion in exploration and mining investment if it corrects policies that have scared away foreign investors.

Mining has become a pillar of the country's battered economy, following the collapse of commercial farming, with gold alone generating a third of all export revenue.

But large mining houses have kept away from Zimbabwe's mining sector after an economic crisis worsened by President Robert Mugabe's policies, including a nationalisation law targeting majority holding by locals in foreign-owned mines.

The veteran 85-year-old leader in February formed a unity government with Tsvangirai, raising hopes that some of the controversial laws would be scrapped.

Tsvangirai told members of the Chamber of Mines at an annual general meeting that the global mining boom witnessed in the past few years could resume by mid next year, which the country could take advantage of by having attractive policies.

"Government has a window of opportunity to prepare a conducive policy environment by mid 2010, that could see Zimbabwe's minerals sector attracting between $6 billion and $16 billion in exploration and mine development during the 2011-2018 period," Tsvangirai said.

Tsvangirai said while it was necessary to allow locals to participate in the mining industry, this should be done with a view to grow the country's economy.

There has been no exploration since 2002 in Zimbabwe, which has the second largest platinum deposits after South Africa and boasts large reserves of gold, copper, coal and nickel.

Some of the major miners operating in Zimbabwe include Impala Platinum Holdings (Implats), which is the foreign firm with the biggest mining investments, its rival Anglo Platinum and global player Rio Tinto.

Several mines have shut down in the past, suffocated by hyper-inflation, and shortages of skills, power and foreign currency.

EMPOWERMENT

Critics say if having empowerment or locals owning shares in foreign owned companies is not handled carefully, the country could see a repeat of the chaotic land reforms where Mugabe's allies and top government and security officials largely benefited from seized white-owned farms.

"The manner in which this (empowerment) approach and objective are realised has to, as a matter of principle, lead to growth of the economy and the upliftment of the standards of living of our people," said Tsvangirai.

David Murangari, the Chamber of Mines President said the government should take recommendations by miners seriously, especially on the empowerment issue.

Miners want to be allowed to set their own empowerment targets rather than government's proposal to parcel out 51 percent shareholding to locals.

Murangari urged the government to exempt companies from paying full wages to workers to allow them to save jobs and enable a quicker recovery when the global economic crisis ends.

"We would like to suggest that consideration be given to allow employers to get exemption from paying full wages ... (this) would assist to preserve assets, save jobs to enable an easier resumption when conditions improve," Murangari said.