daniel chigunwe
Nokuthula G Moyo-Muparuri
The previous article about start-up communities for the food sector, emphasised the development of a unified food strategy which is cognisant of the prevailing food culture, nutrition, food production and distribution systems, food security and trade requirements while developing capacity to adapt to climate change.
This article is about building knowledge and innovation start-up communities for mineral based industrialisation.
The following will be discussed; mineral based industrialisation; developing an enabling environment for mineral driven industrialisation; establishing Zimbabwe’s critical minerals strategy; determining the mining value chain; and developing the start-up community for mineral based industries.
Mineral Based industrialiation
Mineral-based industries are main industries that get their raw materials from mineral ores. The products of these industries feed other industries.
Mineral-based industries include the steel and iron industries, as well as the heavy machinery industries.
Mineral-based industries are significant to a country’s economy. Mineral-based businesses rely on minerals such as iron, copper, zinc, and lead.
These are the heavy industries that contribute to the country’s infrastructure growth and development.
For instance, the iron and steel industry is the foundation upon which all other industries are built. Steel output and consumption per capita are indicators of a country’s economic progress.
Iron ore, coal and limestone are the primary raw materials used in the iron and steel industry.
Because the raw materials and completed products of the iron and steel industries are very bulky, these businesses must be situated near mining sites of the needed minerals and be linked by a strong transportation network.
There is a need to foster mineral based industrialisation by incentivising downstream processing. Policy decisions to foster downstream processing should be grounded in economic analysis.
In addition, fundamental prerequisites necessary for successful implementation must be in place. Such policies should be driven by long-term political considerations thus leading to sustainable outcomes.
Factors determining downstream investments should include; developing a guaranteed market demand both domestically and internationally; ensuring suitable geographical location and good infrastructure; access to reliable and cost-effective energy; availability of a competitive labour force; policy coherence and a sound business environment; monetary and macroeconomic stability and proximity to raw materials.
Policy options to encourage downstream activities should include; various forms of fiscal and non-fiscal incentives; prescriptive measures such as export duties; bans or legal obligations to process minerals domestically; the use of bargaining power in negotiations; beneficiation conditions linked to bidding processes and government led incentives.
Zimbabwe needs to focus on promoting the enabling environment for minerals driven industrialisation, through creating the conditions for attracting processing plants, that is, developing an enabling environment for private investments.
Developing an enabling environment for minerals driven industrialisation
Downstream processing plays a pivotal role in fostering economic growth and industrial development. Thus, the government can offer a suite of investment incentives and tax regulations to incentivise investment in this sector.
These incentives aim to enhance the competitiveness of downstream industries, attract foreign investment and stimulate domestic entrepreneurship.
One of the key incentives is the provision of tax holidays, offering eligible downstream processors a period of exemption from corporate income tax.
This encourages long term investment commitments, providing financial relief and bolstering competitiveness in global markets.
Additionally, investment allowances are available to offset eligible capital expenditures incurred during the establishment or expansion of downstream processing facilities.
The facilities capital investment accelerates project timelines and enhances the overall investment climate. Special economic zones present another avenue for incentivising downstream processing activities.
The designated zones offer a conducive regulatory environment, streamlined administrative processes and preferential tax treatment, attracting investment and promoting export-oriented industrialisation.
By leveraging these investment incentives and tax regulations, stakeholders in the downstream processing sector can optimise capital allocation, mitigate investment risks and enhance operational efficiency. This in turn fosters innovation, job creation and sustainable economic growth, positioning the country as a global hub for value added mineral processing.
Establishing Zimbabwe’s critical minerals strategy
There is need to develop Zimbabwe’s critical minerals strategy. The list of Zimbabwe’s critical minerals should include gold, precious group metals, lithium, diamonds, iron and steel, chrome, oil and gas, coal, nickel and copper.
The strategy should enable the country to create diverse, resilient and sustainable supply chains through strong and secure international partnerships; build sovereign capability in critical minerals processing; use the country’s critical minerals to help Zimbabwe to become a renewable energy super power; performing a comprehensive artisanal small scale mining sector diagnosis, with a view to capacitate the sector to effectively contribute to the economy; extract more value from the country’s resources to create jobs and economic opportunities for national and regional communities, that is also to benefit the African continent.
The strategy should clearly determine the steps how each critical mineral will carry out the upstream and downstream processing to ensure industrialisation.
Determining the mining value chain
The mining value chain represents a transformative journey from exploration to fabrication. Effective management and optimisation of each stage are crucial for ensuring the smooth flow of materials, maximising resource utilisation and meeting market demand efficiently.
Using each critical mineral, there is need to determine the value chain by breaking activities into distinctive stages spanning multiple industries; exploration and extraction; mineral processing (beneficiation); smelting and refining; and fabrication.
For each stage there is need to determine both the upstream and downstream activities.
Upstream operations refer to the initial stages of the supply chain, where raw materials are sourced, acquired and transported to manufacturing facilities.
The activities involved are supplier selection, procurement and inventory management. Downstream activities involve ensuring that the raw material is delivered to the end consumer.
This means processing the material and then delivering it to the end user. So there is need to determine the upstream and downstream activities from exploration, mining, mineral processing, smelting and refining up to fabrication for each critical mineral.
This can be used to determine which activities can be targeted for start-ups and small businesses.
Developing the start-up community partnerships for mineral based industries
The start-up community can develop partnerships that will bring together all the different actors critical to the development of start-ups in the mining and mineral based industry.
These partners should include the Ministry of Mines and Minig Development, the Mining Industry Regulator, the Industry Associations such as the Chamber of Mines and the Minerals Marketing Corporation of Zimbabwe, the financial institutions with a specific focus on the mining and mineral based industries, and businesses in the mining and mineral based industries.
These actors can be source of information on all the pertinent issues happening in the mining and mineral based industry. These partners assist the start-up community in developing the relevant solutions to address challenges faced across the mining value chain.
In partnership with the Metallurgical Research Institute, which is housed within Scientific and Industrial Research and Development Centre (SIRDC), the start-up community can carry out research activities to identify challenges requiring innovative solutions across the mining and mineral based industry.
This information together with the critical minerals strategy can assist in developing innovation competitions/challenge looking for start-ups who can develop a business case to address the innovation challenge, which can then be scaled up for the African continent.
Nokuthula G Moyo-Muparuri is a senior lecturer at the Midlands State University in the Faculty of Business Sciences. She is also the founder of the Institute of Applied Entrepreneurship. The mission of the institute is start-up/innovation skills development and start-up/innovation ecosystem development. The institute has established Zim start-up events and competitions to facilitate meet-ups, networking events, start-up competitions and Zim kick-start and scale-up conferences. Those interested can contact the institute on +263718747621.
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