HARARE, March 7 (The Source) – Zimbabwe is slowly regaining its lustre as an important mining country, although considerable political and economic risks continue to hold back the investment needed for the sector to take off, a leading research company has said.
In its report on Zimbabwe’s mining sector, BMI, a member of the Fitch Group, projects rising output across the country’s major minerals.
“Zimbabwe is growing in prominence as a global mining hub as it begins to leverage its considerable minerals and metals resources. The country is richly endowed with gold, nickel, diamonds, chrome and platinum, among other minerals,” BMI says.
“The country’s longstanding economic and political instability has constrained the development of the mining industry; however, foreign investors and mining groups have shown renewed interest in the country in recent years as the business environment has calmed slightly.”
BMI forecasts increased investment in platinum and gold, whose output has bounced back from a lowly 3 tonnes in 2008 to 22 tonnes in 2016. This has been partly attributed a reduction in taxes on junior and artisanal miners.
“However, Zimbabwe’s mining industry faces familiar challenges, not least a lack of sufficient mining and transportation infrastructure. Political risk is also an ongoing concern: government intervention in the diamond mining industry is likely to restrict foreign involvement in the sector amid ZANU PF’s plans to consolidate or nationalise the sector. More recently, we note the government’s seizure of mining land belonging to platinum miner Zimplats, a development that will concern foreign investors looking to the country.”
Zimbabwe’s investment climate has been dimmed by President Robert Mugabe’s policies such as the seizure of white-owned farms and threats to take over majority control of all foreign firms, including mines and banks.
As a result, the country has lagged behind regional peers in attracting foreign direct investment as well as economic growth.