HARARE – With a depressed global outlook negatively affecting metal prices and viability of local miners, we would have expected the Zanu Pf-led government to be planning policies that will aid the recovery of the mining sector.
But typical of the revolutionary party, its planned policy to ban the export of raw platinum without taking into consideration factors on the ground will fly in the face of its planned economy recovery aided by the extractive sector.
“Let us close our doors immediately and say no raw platinum will go to South Africa. The former minister gave them two years and we must see them now arranging to build a refinery,” President Robert Mugabe has been quoted as saying.
Already the mining sector’s growth rate has been revised downwards to a mere 5,3 percent from an initial 17 percent this year.
Although we all agree the country would be able to generate more revenue by exporting processed platinum group metals, after all it has the world’s second-largest known platinum deposits after South Africa and accounts for about six percent of global production, the concerns of the sector and players also has to play a leading role before any policy is mooted.
Miners, Impala Platinum Holdings (Impala), Anglo American Platinum Limited (Anglo) and Aquarius Platinum (Aquarius) through the Chamber of Mines say $3 billion in investment will be required to construct the much talked about smelter in a country that had a $3,5 billion budget last year.
Although Zimplats has been linked with a $30 million investment into a feasibility study for the plant, the facility will require the company to increase its current output to justify the investment in an economy where the sector is currently in need of more than $5 billion to fully recover from a decade of economic stagnation.
The big question that the government planned policy fails to answer is how do they expect the miners to make such a big investment in a country dogged with policy inconsistencies and lack of investor confidence.
After all, most mining operations are threatened with takeover under the controversial indigenisation legislation that requires them to cede a controlling 51 percent stake to locals.
The smelter that has been called for, will require a consistent power supply of 100 megawatts of power , a position which Zimbabwe at the moment will not be able to meet considering that we are currently battling to meet demand, and producing only 1 300MW from a demand of 2 200MW.
We urge the government to think through the policy, lest we create viability challenges like those that have brought chrome miners on their knees after banning the export of chrome ore.