HomeBusiness DigestZim needs to shake off investor fears: Report

Zim needs to shake off investor fears: Report

ZIMBABWE needs to shake off investor fears that its indigenisation and empowerment policy is not a nationalisation attempt of foreign owned firms as widely viewed abroad to enable the mining sector to attract investment, a gold sector special report says.

A report compiled by the World Gold Analyst Special Report commissioned by the Chamber of Mines of Zimbabwe highlights wide-ranging problems the industry is facing.
The report cautioned government against pursuing a nationalisation plan or be seen as doing that through its indigenisation plan.
“If indigenisation possibility represents a form of creeping nationalisation, overt nationalisation still hovers as a perceived threat to many looking at the country and the administration from London, New York, Toronto, Johannesburg or Sydney,” the report said.
“Fear is generated by government sponsored actions of the early part of the decade that saw expropriation of land owned by white farmers and particularly the acts of violence that accompanied the re-distribution moves.”
But President Robert Mugabe denies he plans to nationalise mines arguing the policy is meant to empower Zimbabweans.

Perceptions count
The industry also faces weaknesses such as perceived security risks, scattered mines, undercapitalisation and power supply problems.
“Perception probably doesn’t represent the situation on the ground within the country now but perceptions count. Investors need reassurance from a government tough on law and order,” said the report.
“There is lack of money to build more logically sized mines and power supplies are limiting normal operating and constraining expansion. Mines are installing their own generators but this is costly.”
According to the report, the gold mining industry has lost a lot of valuable skilled personnel to the region and abroad in the last decade due to economic recession,  which has impacted on the growth of the industry. Mines say if no substantial capital is re-invested in the business, the gold sector output is forecast to increase steadily from 4,9t in 2009 to 7,5t in 2010; 10,4t in 2011; 12.5t in 2012 and progressively to 25t by 2015.

Lack of skilled workers
“Lack of appropriate skills at all levels of the industry is of great concern to mining management and a very real limiting factor on growth,” stated the report.
“The industry has lost a lot of skill in the last decade and the skills base which had been developed in this country since 1980 were second to none and today, if you go anywhere in the world, Zimbabweans are running major undertakings.”
Infrastructure, another critical challenge to the growth of the industry with issues like improved roads and rail networks and water supplies, should be addressed in order to attract investment for industry’s growth purposes, the report said.
“The question of appropriate level of infrastructure to support mining is an important one that would be explorers and miners place high on their list of desirables when considering investing in a particular country,” it added.
Security of tenure, the report said, was another major risk factor that will challenge growth of the gold mining industry, the report says.

Some good news
On a positive note, the study says Zimbabwe is home to “world class” greenstone belts and generally unexploited sulphide resources.
“Zimbabwe has proven gold production record and there may be deposits of greater size than those already exploited and has an understanding of mining, its importance plus the skills needed to develop the industry (although they might not all be in Zimbabwe currently),” stated the report “Sulphide potential needs to be quantified as little structured exploration work has been undertaken thus far throughout the long history of the industry.”


Chris Muronzi/Winfilda Shana

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