Zimbabwe’s untapped mining potential (1)

By Eben Mabunda

HARARE (Mining Index) – IN October 2020, the Zimbabwean government tabled an ambitious policy document that aims to turn the mining sector in the country into a US$12 billion industry by 2023. The blue print targets gold output of US$4 billion per year with platinum coming in second at US$3 billion.

Diamond is targeted to grow to US$1 billion, equal to the combined target of chrome, nickel and steel. Coal, hydrocarbons, lithium and other minerals are projected to contribute the remainder.

While the target is very much realistic, the government’s economic policy and regulatory framework is not realistic enough to allow the realization of the ambitious target.

Gargantuan value

Mining is the anchor of Zimbabwe’s economic advancement, with mineral exports accounting for over circa 60% of the country’s export earnings over the past five years. The mining sector boasts of over 800 operating mines across the country ranging from international mining houses to small-scale mines. 80 000 people are formally employed: directly and indirectly in downstream businesses. The sector is also home to over 550 000 small-scale and artisanal miners who are mainly engaged in gold and chrome mining

Dubbed the Jewel of Africa by the late founding father of Tanzania, Julius Kambarage Nyerere, Zimbabwe is endowed with two prominent geological features, namely the rich Great Dyke and the ancient Greenstone Belts (also known as Gold Belts), which are home to billions worth of reserves in chrome, gold, nickel, diamond, iron ore and platinum. The country has a massive competitive advantage in the mining sector, with a highly diversified mineral resource base of over 60 commercially exploitable minerals.

Minerals: a cross-section

The nation is graced with of a wide variety of platinum group metals including platinum, rhodium and  palladium among others. The country’s mineral rich Great Dyke area, is the second-largest platinum deposit in the world with around 2.8 billion tonnes of ore belonging to the platinum group metals. The country currently has three major platinum mines the mineral rich area.

Zimbabwe is the third largest platinum producer globally, whose current output is less than half of Russia, the largest platinum producing country.

On the Continent, Zimbabwe is second only to South Africa in output. Rhodium a mineral mined alongside Platinum, is currently the world’s most valuable mineral having sky-rocketed beyond $21 000 an ounce in 2021.

Zimbabwe made the headlines in 2012 for its alluvial Diamond deposits in Eastern and Southern Zimbabwe whose value ran into billions of dolllars. The alluvial deposits have run dry but the underground deposits remain in abundance. Between 2014 and 2019, Zimbabwe produced 12 million carats of Diamond, making it the worlds’s 5th largest Diamond producer behind Russia, Australia, Angola, and Botswana respectively.

Gold’s contribution peaked in 2018 at 33.2 tonnes, when the sector generated US$1.2 billion and 27% of Zimbabwes’s export earnings. According to statista.com, Zimbabwe ranks 8th in Africa in gold production with South Africa and Ghana leading the pack at 160 and 120 tonnes respectively. The assessment was based on 2019 figures when Zimbabwe produced 28 tonnes. In 2020, The country officially produced 19 tonnes of gold which was 18% below a prior year performance of 23 tonnes.

Nickel mattes surpassed gold and tobacco to clinch the top spot in the country’s 2020 forex earnings as the metal raked in US$985 million, a 22.4% input to Zimbabwe’s 2020 forex receipts. This was a 100% surge from the US$489 million recorded in 2019. Meanwhile, nickel ores and concentrates which were the country’s third-biggest export in 2019 contributed  US$612 million in 2020.

Bolstering nickel matte’s sterling outturn is a firming of nickel prices over the past couple of years as demand for nickel in the batteries that power Electronic Vehicles is mounting, on the back of an anticipated boom in the global Electric Vehicles (EVS) industry.

Also relevant to the EVs subject is the nation’s Lithium, whose production ranks fifth globally with the nation being home to the largest single lithium rock deposit.

The list of Zimbabwe’s competitive mineral production and resource base is quite verbose, but will lastly mention ‘the Jewel’s’ chrome reserves which rank second globally.

Projections

The Chamber of Mines in Zimbabwe (CoMZ) recently predicted that production from mining could reach US$18 billion by 2030 if and only if, key challenges in the sector are ironed out through policy and solid legislative reforms.

According to the National Development Strategy 1 Zimbabwe’s mining sector is expected to grow by 8% between 2021 and 2025. The  growth is hinged on expectations of an increase in mining capacity utilisation from the  current 61% to about 80% in 2021 on the back of  improved power supply and foreign currency availability.

The Puzzle

Are we anywhere close to the bullish targets? If not why? What can be done to transform the matrix? ENDS// www.miningindex.co.zw

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