'Bad policies stifling mining'

HARARE - Zimbabwe's mining sector — once flaunted as one of the economic pillars with capacity to turn around the country’s waning fortunes, — is being stifled by government’s poor policy decisions, a Canadian think tank has warned.

The Fraser Institute, which ranked Zimbabwe at number 118 out of 122 in its 2014 annual survey of mining companies, said government’s interference was making the mining sector unattractive to foreign investments.

“The main problem with Zimbabwe is the impromptu changes in policy over ownership of mineral rights and taking leases off companies after exploration success,” said the Institute.

According to the economic think-tank, Zimbabwe’s performance was dismal in terms of its policy perception index — a composite index measuring the overall policy attractiveness of the 122 jurisdictions in the survey — and best practice mining potential.

Economic experts say lack of investment in the country’s mining sector, with abundant natural resources such as platinum, gold, diamonds, iron ore and ferrochrome among others, has resulted in high poverty levels and unemployment rate estimated above 80 percent.

The indigenisation policy, which forces foreigners to cede 51 percent of their shareholding to locals, an outdated mining policy, inadequate electricity and rampant policy inconsistencies have scared potential investors away.

For instance, in 2013 Zimbabwe indicated its intention to seize 27 498 hectares of the land belonging to platinum miner, Zimplats. At the time, the Mines ministry said Zimplats would not exhaust the ore within the tenure of its 25-year lease which was granted in 1994.

Mines minister Walter Chidakwa is also on record saying the country will not hesitate to repossess unused mines and hand them to productive local and international miners.

“Those fortunate enough to have these claims must use them. Let me take this opportunity to encourage those who sit on concessions to seriously begin to work on these properties so that they can contribute towards national economic growth,” Chidakwa said at the commissioning of Zimbabwe and Russia’s $3 billion platinum project in Darwendale.

“We are not in support of such selfish practices, and government is going to repossess such claims,” he warned, adding that some companies “hold concessions merely for speculative purposes at the expense of the nation”.

Chidakwa noted that there were numerous investors, local and foreign, who were eager to begin mining operations in Zimbabwe, but were being crowded out by unproductive concession holders.

“They are holding onto the mines and chasing away potential investors.

“We cannot have this as a government,” he said.

Last year, Vice President Emmerson Mnangagwa, took a swipe at unproductive miners.

Mnangagwa, who was speaking at Huchu Stadium in Mvuma, said Athens Mine — which closed despite having rich gold deposits — must immediately restart production.

“Their days are numbered, unless they start production. There are many Zimbabweans who will put that mine to good use and shield themselves from economic hardships,” he said.

Athens Mine was shut down in 2013 after the owners removed all equipment and handed over the running of the operations to a group of workers who are currently manning the area.

The owners cited viability challenges.

In 2010, Zimbabwe also unilaterally cancelled Amari Platinum’s licence to operate a platinum concession on the Great Dyke after the company had spent millions of dollars exploring it and identifying an economically viable resource of 18 million ounces of platinum group metals.

Amari later seized Zimbabwe’s diamonds worthy $45 million in Belgium to recoup its capital.

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