To that end, three major mining conferences have been held in the last four months. One was staged in London, one in Johannesburg, and two weeks ago a third was held in Harare. All had substantial attendances from mining houses, and other investors, from many parts of the world.
That there was considerable, real interest was unsurprising, for Zimbabwe has a considerable wealth in many minerals including gold, platinum, nickel, diamonds, chrome, iron, coal, methane gas and much else.
Although it had a virile mining industry for many years until the governmentally mismanaged economy plunged to abysmal depths, most of the country’s substantial mineral wealth was yet to be exploited.
Attaining a marked growth in mining production would yield substantial inflows of greatly needed foreign exchange, create meaningful additional employment for a populace which is predominately without gainful formal employment, generate extensive downstream economic activity and be a source of considerable fiscal inflows into the bankrupt exchequer.
It is little wonder, therefore, that government has placed a high focus upon trying to motivate extensive mining sector investment.
Regrettably, however, it grievously tempered the widespread, intensive investor interest by its ongoing failure to recognise that one of the prerequisites for the conversion of that interest into actual investment is that investors seek credible assurances of investment security.
Such assurances are an absolutely essential element of an investment conducive and welcoming environment.
Although there have been major strides towards making Zimbabwe an attractive investment destination, including extensive relaxations of exchange controls, the demonetisation of the then worthless Zimbabwean currency and its replacement with a basket of sound international currencies, and some reduction in the bureaucracy attaching to foreign investment, some great deterrents remain in place to investor’s need for a meaningful sense that their investments will be secure and ongoing. And these deterrents were exacerbated by unrealistic, naïve statements to the conferences by some of Zimbabwe’s uppermost political echelon, especially so at the Harare conference.
Participants were told that fears of expropriation of mines were wholly misplaced. They were informed that because government had acquired all farms, pursuant to its land reform policies, there was no implication that at a future date Government would implement a like policy in respect of the mines.
However, the investor attendees were not convinced. Concurrently with their being given that assurance, farm invasions were continuing unabated and generally in a violent, destructive and abusive manner, totally unhindered by the so-called guardians of law and order.
Moreover, government endlessly made reference to the mining resources being Zimbabwean assets. The fears of the potential investors were also intensified by their awareness that Zimbabwe continues to dishonour the many Bilateral Investment Promotion and Protection Agreements (Bippas) to which it is a party, and by knowledge that conclusion of a Bippa with South Africa is being frustrated by Zimbabwe’s unwillingness to incorporate land protection rights.
Intensifying the concerns of those attending the conferences, and thereby eroding their evident interest, is government’s dogmatic stance on the issue of indigenisation and economic empowerment, and its intended amendments to the Mines and Minerals Act. The state’s declared intent is that not less than 51% of all mines should be owned by indigenous Zimbabweans.
Furthermore, although in various statements by the President, the Minister of Mines and the Minister of Indigenisation and Economic Empowerment that the Zimbabwean investors would have to contribute their pro rata share of equity in the mines, and that the foreign investors can freely select their indigenous investor partners, the legislation is studiously silent thereon.
It is unrealistic to expect foreign investors to provide capital, technological “know-how’, and other inputs, and yet be junior partners subject to the whims and fancies of the majority shareholders.
Few, if any, of the potential investors have any quarrel with the principle of indigenisation and economic empowerment, but they are unwilling to be dominated by others. Admittedly, government has suggested that investors can apply for partial or total exemptions from the provisions of the legislation, but concurrently intimated that such exemptions, if granted, would be for a period of time not necessarily aligned to the life of the mine.
And, adding insult to injury, government requires that in addition to an array of taxes payable by the mining ventures, substantial mining royalties must also be paid, further eroding return on investment.
Yet another concern impeding investor confidence is the continuing abysmal service delivery of parastatals in general, and of Zesa, TelOne, and National Railways of Zimbabwe in particular. That service unreliability very pronouncedly impairs operational viability of mines, and therefore places investment viability at great risk.
Similarly, the successful conduct of mining operations is recurrently at risk as a result of the intense confrontationalism of labour which, driven by undeniable hardships as a result of the distressed economic conditions of the past eleven years, make irrational, unreasonable wage demands beyond employers’ means.
The potential investors also harbour great reservations as to investor security as long as political instability and inadequate maintenance of law and order continue to exist.
They witness the recurrent evasion of some of the elements of the Global Political Agreement, such as the endless delay in swearing-in the MDC-T nominated Deputy Minister of Agriculture, Roy Bennett, the endless belittling by state owned media of the two MDC parties, and other defaults in implementation of the GPA.
They also witness the frequent arrests of politicians, more often than not for extended periods without proceeding to trial, and other undeniable symptoms of disregard for international norms of justice, and of a contemptuous failure to maintain law and order.
Zimbabwe has a major opportunity to accelerate its critically needed economic recovery, with a key factor being foreign investment into many economic sectors, but first and foremost into mining. However, that opportunity is being extensively squandered by the endless failure to consider, and to address effectively, the justified concerns and expectations of investors.