IN a rare case of good news to come out of Zimbabwe’s struggling economy, two South African companies will on Monday reopen Eureka Mine, which has been shut down for the past five years.
The reopening of the mine is probably this year’s first real addition to Zimbabwe’s foreign investment portfolio which has been waning for the past five years due to serious political and economic problems.
There has been very little foreign direct investment in Zimbabwe because of political uncertainty.
The South African companies, Mmkau Mining and Shaft Sinkers South Africa, bought the mine from Placerdome Pvt Ltd, an Australian company that pulled out in 2000. Placerdome disinvested from the mine after realising that deposits were too small to justify further investment.
The mine in Magunje already has a staff complement of 40 people which it plans to increase to 300 in the next 18 months. The mine has an estimated 15 years worth of gold deposits.
Sharlemagne Chimbangu, a Zimbabwean who is one of the directors and shareholder in Mmkau Mining, confirmed that the mine would open next week, adding that a function had been organised to mark the event.
“We are going to reopen the mine on Monday but work has already started,” said Chimbangu.
This is a major development for Mashonaland West whose businesses have been devastated by the chaotic land reform. Most commercial farmers that supported Mashonaland West were driven off their properties by government’s land reform.
“We hope to create about 300 jobs in the next 18 months to benefit the local community,” Chimbangu said.
Mining is the only sector that managed to achieve positive growth in the past two years. While other key sectors are expected to decline this year, mining is expected to grow by 7%.
It contributes 4% to the country’s gross domestic product (GDP) and 4,5% of employment. The sector contributes 16% of the country’s foreign currency earnings.
Government figures show that only 25% of the deposits are in active production. Further investment has however been stalled by lack of clear policy and bloated cost structures of mining in Zimbabwe.
Zimbabwe is one of the most expensive countries to do mining in. Its skewed mining laws, especially on empowerment, have scared away potential investors.
More than 10 mines have closed shop over the past decade due to increased costs, low-grade deposits and perennial foreign currency shortages.
More than four mines have shut down in Mashonaland West alone including, Venice (gold), Mhangura (copper) and Cam & Motor Mine (gold).
Falcon Gold’s Dalny Mine near Kadoma is partially open but is also threatening to cease operations. Other mines that have closed include Buchwa (iron) and Kamativi (tin).