By Mining Technology

BETWEEN colonial intervention and a weak regulatory framework, mining in Zimbabwe has struggled to live up to its potential. With the government cracking down on undeveloped licenses, and aiming to force companies to “use it or lose it”, we consider the history of mining in Zimbabwe, and who the winners and losers of the new policy could be.

Mining could prove to be big business in Zimbabwe, with mineral exports responsible for 60% of the country’s export earnings as of October 2018, and the mining sector contributing around 16% of national GDP.

The government has also outlined ambitious plans to quadruple the sector’s total value to $12bn by 2023 as it looks to take advantage of abundant natural resources such as the country’s Great Dyke, the second-largest platinum deposit in the world with around 2.8 billion tonnes of ore belonging to the platinum group metals.

However, this potential has been hamstrung by an inefficient sector, which has failed to meet its 2019 gold production target of 40 tons, and reached a value estimated to be around just $3bn.

A key contributing factor is the country’s lax licensing laws, which permit foreign companies to own 100% of a mine licence for any commodity, save platinum and diamonds, in perpetuity. This has led to several firms holding cheaply-acquired licences for years, with no pressure to develop them into producing mines, cutting into Zimbabwe’s potential production and depriving smaller and local companies from the opportunity to develop projects.

In November, mining minister Winston Chitando announced that the government will force companies to develop these assets as part of a ‘use it or lose it’ policy, its latest attempt to remove inefficiencies from and stimulate growth in the mining sector.

The policy builds on similar initiatives deployed in the gold mining sector, and is a combination of pro-Zimbabwean policies implemented in the years following independence, and pro-business policies that have underpinned the country’s economy for a century. The question remains, however, who stands to gain the most from this hybrid legal apparatus?

Foreign involvement and concentrated wealth
Despite its mineral wealth, Zimbabwe has historically struggled to turn these resources into profitable enterprises, in no small part due to the country’s occupation by the UK in the mid-20th century.

Throughout the post-war period, including its lengthy divorce from the British between the unilateral declaration of independence in 1965 and the election of Robert Mugabe as president in 1980, the influence of overseas, and particularly British, companies in its mineral sector hamstrung the mining industry.

In ‘The mining industry in Zimbabwe: labour, capital and the state’, published in Africa Development by John Bradbury and Eric Worby, the writers note that by 1980, up to 95% of the country’s mineral output was produced and controlled by foreign companies, a model that led to a dramatic concentration of the mining workforce in a few projects.

By 1980, the 14 largest mines in the country, all of which were owned by foreign firms, employed 61% of the country’s mining workforce, leaving much of the country’s mineral wealth undeveloped despite these miners possessing licenses for a number of projects.

This impact has been magnified by the struggles of Zimbabwe’s domestic miners to compete with these foreign investors. Warren Beech, head of mining and infrastructure at law firm Eversheds Sutherland, noted that “without significant investment from foreign-owned mining companies, it is unlikely that Zimbabwe will be able to unlock its vast mineral wealth, which is vital not only to the development of Zimbabwe’s economy, but also transformation, growth and development, in general.”

Yet despite these investments in mining, there has not been a parallel growth in the Zimbabwean economy, with Bradbury and Worby noting that the goal of much of the investment in mining has been “the process of capital accumulation and the inter-regional transfer of value out of Zimbabwe mostly into South Africa, the UK and the USA.” Despite what they call a “gratifying increase in the value of production” for a select few firms, the total value of the country’s mineral production fell from Z$414.8m in 1980 to Z$383m just two years later.