THE replacement of Zimbabwean President Robert Mugabe with his party rival Emmerson Mnangagwa seems to have resuscitated the interest of several South African mining firms which have turned to the Southern African country in the hope of achieving low-cost expansion.
In recent weeks, both Johannesburg-listed gold producer Pan African Resources, and Tharisa, a UK-listed chrome and platinum group metals (PGM) company headquartered and operating in SA, have signalled the possibility of buying assets in the country.
This follows an announcement last year by another Johannesburg-listed company, Pallinghurst Resources, which said it had won an agreement with the Mugabe administration to install its bespoke platinum smelting technology, which would be mandatorily made available to some PGM producers operating in Zimbabwe.
Arne Frandsen, CEO of Pallinghurst, said its agreement still held water under Mnangagwa as the agreement was signed with cabinet, not Mugabe directly.
There was even talk that the much-disliked “indigenisation” policy – Zimbabwe’s version of black economic empowerment – might not be applied to its fullest extent, which is to see foreign investors relinquish control of their assets to government-nominated partners.
The current difficulty for Zimbabwe, however, is knowing what’s for certain in a rapidly changing business and political environment.
Newly appointed mines minister Winston Chitando, speaking at an event about Zimbabwean investment at the Mining Indaba in Cape Town on 6 February, confirmed there were no plans to extend the relaxation of indigenisation to either platinum or diamonds, though other minerals – and other sectors of the economy – would see a relaxation.
Asked to comment on platinum and diamonds as so-called “strategic minerals” to which indigenisation would apply, Chitando said: “The implication is that they [mining firms] have to operate in a manner in which government wants in order to ensure 51% local participation. That is going to stay.”
Perhaps the improvement in business environment in Zimbabwe is most important for those companies with existing operations in the country; namely, the likes of Impala Platinum, Sibanye-Stillwater and Anglo American Platinum (Amplats), which operate PGM facilities there. Advertisement
Said Mpumi Sithole, a spokesperson for Amplats: “Obviously Unki is a strategic investment for Amplats and as a long-term investor in Zimbabwe, the recent positive efforts by the government to improve the business environment can only be positive for Unki and future projects.”
Amplats decided to build the Unki platinum mine in 2008 and has since invested $500m including in the mine, concentrator, employee housing and most recently a smelter, in order to comply with Zimbabwean legislation.
“We have always recognised the vast investment potential in Zimbabwe over many years,” said Johan Theron, spokesman for Impala Platinum.
“During this time, we have faced many challenges in Zimbabwe, but generally managed to secure mutually beneficial outcomes through open and honest engagement.
“So we are not surprised to see the world waking up to this reality after the recent political changes. We are especially emboldened by government announcements that seem to signal a new pragmatic approach to sound policies in order to grow and sustain the country.
We remain optimistic that this will materialise,” he said.
Implats had earlier threatened to shut its Mimosa mine in Zimbabwe if the government insisted on a 15% levy on exports of unbeneficiated platinum at the beginning of this year.
The levy has now been pushed out to 2019 in order to recognise investments undertaken by miners to beneficiate the metal.
Under the new economic dispensation in Zimbabwe, a tax of 5% is to be levied on exports of PGM concentrates, some 2.5% on white platinum matte shipments, 1% on PGM/base metal refinery exports, and a zero-rated levy applied to fully refined platinum exported for sale.