Everything is in place for the Zimbabwe mining industry to take off, so now appears to be the time to invest. Andrew Meldrum reports from Harare
WITH earnings of more than Z$7-billion ($620-million) last year and enthusiastic exploration activity, Zimbabwe’s mining industry is booming and looking for more.
A big new platinum mine and several projects in the planning stages promise to make Zimbabwe a top producer of the metal.
“These are exciting times for the Zimbabwe economy, and mining is especially buoyant,” says Godfrey Gomwe, managing director of Africa Resources, a mining and industrial group with a Z$1,2-billion turnover.
“Everything is in place for Zimbabwe to attract new mining ventures,” says Gomwe, citing government tax incentives and support from the Geological Survey.
“As a result, mining is the only sector with visible inflows of direct foreign investment. BHP, Delta Gold, Cluff, Reunion and Trillion have all brought in funds to start mining operations, and they are exploring aggressively. These companies are starting hi-tech operations not seen in this country before.”
Gomwe knows what he is talking about. He ran Cluff’s Freda-Rebecca mine which transformed a low-grade mine into one of Zimbabwe’s biggest gold producers.
Cluff Zimbabwe has now been taken over by Africa’s new gold giant, Ashanti. Gomwe moved on to Africa Resources. “This is a window to demonstrate that black Zimbabweans can run mining corporations. We delivered at Cluff/Ashanti, now I want to do it at Africa Resources.”
Some 230 exclusive prospecting orders have been issued this year and a further 160 are being processed, says Minister of Mines Swithun Mombeshora. This is an impressive increase from the doldrums of 1991 when only 74 orders were processed.
Much of the feverish prospecting is for diamonds, gold and base metals. In addition to abundant resources and government incentives, Zimbabwe offers relatively well-educated and inexpensive labour.
“We have a brains trust here,” boasts Gomwe. “Most of our labour is reasonably well-educated up to the age of about 16. Our labour costs are half of those in South Africa’s mines. And our labour is more reliable and productive.”
The giant Hartley platinum mine, 80km south-west of Harare, is setting the pace. “Everything in mining is overshadowed by Hartley,” says Gomwe. “BHP’s investment alone is to a large extent responsible for the influx of international mining companies to Zimbabwe and the exploring activity. The Hartley investment was like free advertising.”
BHP and fellow Australian firm Delta Gold are investing $280-million to develop a mine projected to produce 150 000 ounces of platinum a year.
“We expect to produce our first platinum in the middle of 1997,” says Colin Palethorpe, BHP senior vice-president. “Our projected 1997 production will only be one-sixth of the full production we expect to reach in 1998.”
That production is expected to represent 3% of the world supply and could earn $96- million a year in exports.
Hartley is a hi-tech development including a concentrator, smelter and refinery. From 180 000 tons of ore per month, the mine is expected to produce 12 500 ounces of platinum.
The platinum will be extracted using complex chemical processes that create marketable by-products: palladium, rhodium, gold, nickel, copper, cobalt, and sodium sulphate.
Zimbabwe could produce 10% of world platinum if other potential projects get under way. BHP, Delta Gold, Zimasco and Anglo American have all staked out prospective mines along Zimbabwe’s Great Dyke, a spine of mineral-studded hills that runs through the country. Zimasco is already mining.
But not everything has been smooth going at Hartley. BHP had a lengthy battle with immigration to get permits for expatriate staff – the project has a staff of 2 700, of whom 70 are expatriates. At full strength it is expected to have 3 100 staff, 86 of them expatriates.
“At the moment we are pleased with administrative procedures by the ministries of Mines and Home Affairs to address some of the delays we experienced a year ago,” Palethorpe says diplomatically.
Others in the mining industry have been amazed that the government has allowed any stumbling blocks to impede BHP’s progress. They say mining firms are watching the Hartley project as a test case to see if mining ventures can succeed in Zimbabwe.
“Certainly it is crucial that this project succeed, not just for the investors, but for the entire Zimbabwe mining industry,” says Palethorpe. “The whole international mining industry, as well as potential investors in other sectors, are watching to see how it goes.
“The conventional wisdom of the platinum industry is that we will fail, because the extraction process is extremely complex and the ground conditions are known to be difficult. What is needed is commitment, deep pockets and the latest technology to be successful. We have all that.”
Gomwe, too, feels that everything is in place for Zimbabwe’s mining sector. “The watchers will sit on the sidelines and wait to see if there will be a better time to invest in Zimbabwe’s mining, but they will miss the boat. This is the time to stop watching and get going.”