By The Solutions Tower Staff
Situated between Zimbabwe’s two major cities, Harare and Bulawayo, the sleepy town of Kadoma is surrounded by idle mines which, in the days following the country’s independence, would very much breathe life into its immediate environs.
But today, the gradual decline of the economy into comatose has led to the closure of some of its mines, consequently turning the once colourful and lively town into a dull and sombre place – one now famous for crime and grime.
A visit to the mining town of Zvishavane would also confirm the serious misfortunes which have befallen much of the nation’s mining sector. Whereas many have painted a doomsday scenario with regards to mining in Zimbabwe, industrial experts argue to the contrary, maintaining that hope for the sector is in sight, and that the southern African state’s economic revival still largely depended on its turnaround.
But before a new lease of life can be breathed into the sick mining sector, economic analysts see first the need for some diagnosis so that appropriate medication is prescribed for the decadence now inherent in the sector.
Some Political analysts have alleged that the ruling-party-spearheaded Land Reform Programme primarily brought about death in the mining sector. According to these analysts, multinational companies, a sizable number of whom were also major players in the mining industry, did not take lightly to land reforms which they perceived as designed to victimise white commercial farmers for harbouring contrary political views to those of the status quo.
Zimbabwe’s ruling Zanu PF party has, however, dismissed the allegations, maintaining that land reforms were necessary and only meant to redress colonial imbalances in land distribution patterns which, for instance, tended to favour the minority white.
The ruling party sees the actions of multinationals as a wilful attempt at sabotaging Zimbabwe’s economic prospects, and in the short to long term cause disaffection among the people, thereby causing regime change in the country.
Populism and Indigenisation Policy
There has also been another spin as to what has really caused the downturn in the mining sector, with government’s indigenisation policy coming up for special mention. Economic conversation around Zimbabwe’s indigenisation policy which, before wide ranging changes altered it, would levy 51% shareholding on all foreign direct investment. This was also b fingered for triggering capital flight, leaving the mining industry vulnerable and almost on its knees.
As a natural consequence of a decline in mining-based economic activity, investment also in other critical areas such as electricity has faltered, causing a steep rise in the cost of power, and further hitting hard on operational capacity of the already declining mining industry. A report by the Zimbabwe Platinum Producers suggests that the cost of electricity should urgently be reviewed as a way to resuscitate the bedridden mining industry.
Populism, mainly from Zimbabwe’s ruling party, has also contributed its fair share to problems besetting the mining sector. By brandishing ZimAsset, a Zanu PF blueprint seeking to return the country to economic sanity, the politically connected have proceeded to lay claim on foreign owned mines. And thereafter, loot and reduce the mines to mere shells. In its trail, political rapaciousness has sunk many a job in the mining industry, apart just from just impoverishing a resources rich nation like Zimbabwe.
Progress and Opportunities in the Mining Sector
A report compiled by the Zimbabwe Platinum Producers points out that platinum has a great potential to grow the economy. The report highlights how the country could benefit from its vast platinum resource. It also suggests that measures that can be taken to ensure a sustained growth of platinum mining in the country.
Zimbabwe has an estimated 4.4 billion of platinum reserves along the Great Dyke, making it the second largest Platinum Group Metals country after South Africa.
More importantly, platinum mining contributes 3, 5 percent to the country’s Gross Domestic Product. Zimbabwe Platinum Producers also claim that for every $1 created in platinum production, $0.73 is consequently created in other sectors of the economy. To date, platinum mining has single handedly created an estimated 40,000 jobs, representing about 25% of current formal employment in Zimbabwe.
Zimbabwe Platinum Producers further claims that the dependency rate on platinum in Zimbabwe presently stands at the ratio of 8:1. This means that the employment figure created by mining platinum translates to 320,000 people benefiting daily from the natural resource. Considering the high unemployment rate in this southern African country, the figure above is not a drop in the ocean at all.
Mining Sector Challenges
The Zimbabwe Chamber of Mines’ report on the state of Zimbabwe’s mining industry, fully endorses the Zimbabwe Platinum Producers’ point of view. For instance, the Zimbabwe Chamber of Mines’ report indicates a lull in mineral exports between 2012 and 2015. It goes on to point out that despite the dip or downturn in minerals production, the mining industry still accounts for over half of the country’s exports.
One of the major challenges faced by the mining sector was identified by the Zimbabwe Chamber of Mines as a lack of capital to keep mines in business. The Zimbabwe Chamber of Mines further reports that the mining industry requires about $3, 8 billion from 2016 – 2020. Of the prescribed amount, $1,2bn is required for sustainability and the other $2,6bn for developmental investments.
According to the Zimbabwe Chamber of Mines, about 86% of mines in the country have identified electrical power shortages as a major stumbling block to production. Power tariffs are said to be too high, with most mines recording losses of over $10 million annually due to power shortages. The Zimbabwe Chamber of Mines claims that the mining industry needs at least 120MW to remain functional
But with the Zimbabwe Government’s lack of political will and poor economic management, Zimbabwe’s economic revival will remain but just a pipe dream for as long as President Mugabe and Zanu PF remain in power.
As Zimbabwe’s economic and political crisis continues to go on unabated, economic revival will not happen under the leadership of President Mugabe but it will take a new political leadership in Zimbabwe to plot a new economic direction that will lead to economic transformation.
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