Zim's poor mining towns feel pinch
Wealthy investors on stock exchanges from Johannesburg to Sydney are feeling the impact of Zimbabwe’s campaign for greater control of its resources. But nowhere is the anxiety more keenly felt than in the poor mining towns that have lived off the mines for decades.
Zvishavane, a mining town in the mineral-rich Midlands province, tells two stories: one of how reckless state takeovers can lead to ruin and the other of how companies free of state control have succeeded.
In 2004 the government took over the management of Zvishavane’s Shabanie asbestos mine, claiming owners SMM Holdings, controlled by businessman Mutumwa Mawere, had committed fraud.
The mine was already in trouble because of the global asbestos ban. But under the government-appointed administrator, its descent into collapse has been headlong.
At the mine worshippers gather at an old Methodist church, said by locals to have been built soon after the first miners arrived in 1916. The church stands like a time capsule in the shadow of the asbestos dumps, which loom grimly over the town. The conveyor belt across the entrance to the mine is rusted and silent, telling of past glory.
The workers’ compound is made up of rows of small bungalows, with the whitewash fading from the large concrete bricks, many of them split apart by wide cracks running down from rusty tin roofs.
There has been no electricity for a year, since the power company cut the mine off over a $1-million bill. At night candles flicker and meals are prepared over fires. Outside in the garden one family cooks the staple sadza (a thick mealie-meal porridge) in an old USAid vegetable oil can.
Workers have not been paid for two years, but some still report to the mine for fear of losing their homes.
Brusel Chirashi, the mine’s finance director, says Shabanie can produce 70-million tonnes of fibre a year. Despite the controversy over asbestos, the mine has orders from more than a dozen countries, mostly in Asia. However, it cannot meet them because it has no working capital.
The story changes at Mimosa platinum mine, 30km away. Mimosa, jointly owned by South African platinum majors Implats and Aquarius, runs its mills for 24 hours a day.
While Shabanie has no power, Mimosa imports its electricity from Mozambique. The workers are relatively well paid—so much so that they employ Shabanie workers for piece jobs in their more modern homes.
In 2010 output at Mimosa was up 11%, to nearly 200 000 ounces. Like other mining companies, the mine plans to expand further despite the threats, according to managing director Winston Chitando.
There are other signs of prosperity here that the residents are happy to flaunt. The local football team, Platinum Stars, sponsored by Mimosa, was recently promoted to the premier league. It is said to be the best-paying club in the country, attracting some of the league’s top players.
The empowerment law has support even among leaders in private business, who want to see greater local control of mineral resources.
However, there is opposition to government’s radical approach. “The need for indigenisation is a noble concept which is not in question and everyone agrees that this is the right way to go. What the people of Zimbabwe have not agreed on is the right way to implement it,” says Victor Gapare, head of the Chamber of Mines.
“We must ensure that we achieve the twin objectives of attracting the investment capital we need on the one hand and empowering the
Zimbabwean people on the other.”
Zimbabwe needs up to $7-billion in new investment to recapitalise its mines and it is unlikely to get that money amid the government’s rhetoric.
The government wants the mines to sell 51% to locals, but the Chamber of Mines proposes a quota of 26%, with the balance of 25% made up of credits from social investment, such as building public infrastructure.
Mimosa has built roads, schools and clinics, refurbished Zvishavane’s hospitals and built houses for its 1 800 workers. However, the government refuses to recognise such investment.
Supporters of the 51% quota say the amount of social investment from the mining companies is dwarfed by what they make from