Despite the political pitfalls that are still ominously present in Zimbabwe, the country’s mining industry grew by a massive 47% last year.

Zimbabwe Chamber of Mines president Victor Gapare says the industry’s growth rate in 2010 would have been significantly higher had it not been for political and infrastructural hindrances.

“The mining sector growth could be much higher but for the recurring challenges that continue to beset the economy, chiefly the lack of adequate, appropriately priced financing for recapitalisation and working capital. Additionally, recurring power out- ages continue to undermine production, and the failure of government to finalise the indigenisation and economic empowerment issues has been an issue limiting the industry’s ability to attract capital,” says Gapare.

He adds that the chamber projects further growth of 44% in 2011, which suggests that the industry is on the way to the beginnings of a recovery.

“Gold, chrome and platinum continue to show strong growth, though all subsectors are in recovery and experiencing steady output growth, with the notable exception of asbestos and, perhaps, granite,” says Gapare.

He adds that the recovery of the industry can be attributed to the financial stability that the industry achieved under govern- ment’s Short Term Economic Recovery Programme.

“It is important to recall that, by the end of 2008, all the mines were virtually at ground zero, except three or so mines that were operating, thanks to a special mining fiscal agreement that insulated the mines, mainly in the platinum and diamond sectors, from the domestic economic environment. Accordingly, the Chamber of Mines views the positive developments in mining and the economy at large as accruing to the business-friendly economic policies of government – in particular, the liberalisation of gold marketing arrangements and the use of multicurrencies in place of the discredited Zimbabwe dollar,” says Gapare.

Apart from the 20 special grants, which government awarded to coal-mining companies last year, Gapare reports that additional new applications are being processed. Prospecting is also ongoing in respect of gold, platinum and other minerals.

“Because of the perceived high country risk, most of the mining projects are significantly discounted and this is as good a time as you will ever get to enter the Zimbabwe mining industry. “However, it’s fair to say that the chamber has seen a lot of interest in the industry but has not seen significant commitment of new money, save for Zimplats, which has committed about $450-million for its expansion programme, and a few other players. It seems to me that most investors are waiting for the finalisation of the indigenisation and economic empowerment provisions,” says Gapare.

Zimbabwe has long been known as a platinum-mining hot spot.

Because government holds most of the country’s platinum resources, there is little leeway for further development in this sector. Gapare says, however, that there is significant activity in the prospecting of coal and gold within the country.

“If the gold industry in Zimbabwe can get $1-billion in new capital over the next three to five years, the chamber feels that gold production could rise to between 40 t/y and 50 t/y within a five- to seven-year time horizon. “However, if the industry does not get that kind of money and has to rely on internally generated resources, then the industry would only grow by 25 t/y to 30 t/y within the same period,” concludes Gapare.

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