JOHANNESBURG (miningweekly.com) – Zimbabwe mining's compelling comparative advantage is its under-utilised mines that investment could very rapidly optimise, Zimvest MD Shaun Lightfoot said on Wednesday.
Lightfoot told Mining Weekly Online, on the sidelines of a British Chamber of Business in Southern Africa meeting in Johannesburg, that the upside for investors was the complete bypassing of any greenfield risk.
He told Mining Weekly Online that several reputable Zimbabwean mining companies owned large proven gold and coal reserves in particular, but that these operations were in a state of gross under-utilisation because of a lack of access to capital.
While platinum was largely already accounted for and diamonds had been singled out for special indigenisation, there were many opportunities in gold and coal.
He said that, while Zimbabwe had a history of producing up to 27 t/y of gold, it would produce only 4 t by the end of this year.
With proper capitalisation and the use of more modern technology, he believed that Zimbabwe could even exceed the former 27-t/y level.
There were also huge coal reserves - containing both energy coal and coking coal - that were not being exploited, a seam in the Sengwa area being 11 m thick with proven reserves of 1,2-billion tons of both thermal and coking coal.
Historical data was available to show what operations had been capable of doing in the past and current geological data could show what they were capable of doing in the future.
"The evidence is there. It's not a question of investors still having to firm up greenfield projects that may or may not yield results. The results are there. It's the capital that is missing," Lightfoot emphasised.
While the Indigenisation Act had laid down indigenisation ownership targets, it had been revised to a point where it was far more investor friendly, and now also placed a value-addition onus on indigenous Zimbabwean partners.
He said that captains of the mining industry were demanding legislative certainty and the authorities were working towards a legislative framework that was sustainable.
A flat tax rate of 15% had been set for mining companies, which initial allowances reduced to an effective 8%. Royalties were minimal, except in the case of diamonds, which had been singled out for special indigenisation.
Capital equipment was duty free and operational losses could be rolled over.
The mining-specific tax regime had been designed to kick-start the Zimbabwe economy.
While demands for beneficiation might arise later, the current emphasis was on getting mining going again.
The main downside risks were the provision of energy and water and, to a lesser extent, infrastructure.
Despite the brain drain, there continued to be many highly skilled unemployed people in Zimbabwe.