SOUTH African companies are being encouraged to invest in the neighbouring mineral-rich country of Zimbabwe, as high-ranking officials sought to allay fears of an unfavourable internal climate.
Addressing potential investors at the latest Zimbabwe Trade and Investment Forum in Johannesburg, Zimbabwe’s Deputy Minister of Mines and Mining Development Fred Moyo said his country was eager to embrace foreign companies willing to invest in the mining sector.
This would boost the southern African country’s struggling economy, he said at the event organised by Mail & Guardian Africa, while giving big benefits to investors.
Zimbabwe is richly endowed with mineral resources such as diamond, gold, platinum, coal, tin, lithium, iron ore, manganese, coal and methane gas.
Despite concerns by some quarters over the country’s indigenisation laws, Moyo said its peaceful atmosphere made it conducive for investment.
“Aspiring investors would have the opportunity to have a presence in a country whose developmental trajectory is positive, supported by huge and diversified mineral resource endowment amenable to low cost mechanised mining,” Moyo said.
“Huge opportunities exist in both greenfield and brownfield projects. There are opportunities for acquisition and merger of existing mines as a growth strategy,” he said.
Moyo said Zimbabwe remained under explored with only 60% of the southern African country having been mapped.
Zimbabwe’s Deputy Minister of Mines and Mining Development Fred Moyo (Photo/CAJ)
“To this end the government of Zimbabwe has established the Mineral Exploration and Promotion Company (MEPC) which is responsible for exploration on behalf of the state to augment private sector efforts,” the minister said.
“The MEPC is open for partnerships in the form of joint ventures as a way of attracting investment in this sector.”
Moyo said government had identified mining as the cornerstone of growth and development following the economic blueprint known as the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset).
ZimAsset’s objective is to enhance economic revival by 2018.
Zimbabwe mining sector has since 2009 been its highest foreign currency earner with a 45% contribution to exports and more than $3 billion worth of contributions to the country’s Gross Domestic Product (GDP).
Revenue however fell 17% from $559 million in the first quarter of 2014 to about $466 million in the comparable period of this year, as global commodity prices slid.
“This can be attributed to the reduction in gold royalties, ongoing gold mobilisation exercise, resuscitation of closed mines, increased capacity utilisation and improved investor confidence in the mining sector,” said Moyo.
Moyo nonetheless projected the sector would rebound and earn the country more revenue.
Foreign investors would also find the country’s long history of mining attractive, the official said. “Therefore there are no severe cultural shocks.”
Several private mining operations already have a presence in Zimbabwe, including Zimplats, Mimosa Mining, Unki, Metalon Gold, Rio Zim and Hwange Colliery.
While a high number of these are foreign-owned, Zimbabwe has over the years had to contend with a tag as an unattractive investment destination.
The perception of some several international communities, especially in the West, dates back to the year 2000 when Zimbabwe’s government endorsed the takeover of mainly white-owned commercial farms for distribution among the majority black.
Concern has further been raised regarding the country’s indigenisation laws, which compel foreign-owned firms in key sectors of the economy such mining, to cede a majority stake, at least 51%, to indigenous Zimbabweans.
The Indigenisation and Economic Empowerment Bill defines an indigenous Zimbabwean as “any person who before the 18th of April 1980 was disadvantaged by unfair discrimination on the grounds of his or her race, and any descendant of such person.”
Zimbabwe attained independence from Britain following a lengthy liberation war.
In addition, earlier this year, Zimbabwe announced plans to merge all diamond miners into a single company in which the state would own 50% of the shares as part of its black economic empowerment programme (BEE).
This coincided with mining giant Rio Tinto agreeing to sell its 78% stake in the Murowa Diamonds Mine and its 50% holding in the Sengwa Colliery Mine to its former local unit, RioZim.
But Moyo sought to reassure investors. “The country remains ready to do business with the rest of the world on a fair economic basis.”