Online Reporter
THE main value in raw materials for industry is not so much in the original ores and crops as they are dug out of the ground by miners or grown in fields by farmers, but in the processed products with a lot of value added.
There are several steps in this development, from simple concentrates of minerals, cleaned and properly graded crops with set moisture levels through the stages where the materials can be taken to a factory and used without additional processing and then in the final stages turning them into industrial products that can be put on a shelf in a shop and sold to final users.
The first big jump in value in minerals is when they are turned from ores, even concentrated ores, into the ingots, bars or, in the case of highly-chemically reactive lithium and similar metals, into stable salts that can be loaded into containers and delivered to a factory gate.
Global prices suggest that the value of a fully-processed mineral could be worth as much as three times as much as the original ores, although even a doubling would be good once additional costs are factored in.
The multiplying factor is not fixed or even very stable since ore prices can fluctuate wildly while the factory-ready prices of processed raw materials, with their largely-fixed processing costs, jump around a lot less. That is another plus for Zimbabwe.
When the Second Republic started working on the major economic reforms in 2018, the need for processing raw materials before export was seen as an obvious policy that needed to be moved from the filing cabinet of wish lists into actual implementation.
This could not be instant. It takes time to build modern processing plants.
Volumes have to be high enough to make the move viable, since a processing plant, even one of the minimum viable size, cannot sit idle for much of the time waiting for the next batch of ores. And we had to make sure that potential investors sufficiently trusted the Zimbabwean Government and the practical back-up of energy and transport infrastructure to commit the very large sums required.
The clean-up of the economy was the obvious first step, and that was required by Zimbabweans as well as investors. This is why, in the first place, Zimbabweans elected the Second Republic.
The new investor-friendly and business-friendly policies had to be seen and tested, and there were some major changes in both the investment and business arenas that everyone wanted to see if they worked and were being implemented, not just talked about.
That being done, and the changes were working and seen to be working, the Government was able to move into the next stage, or first encouraging in-country processing and then making such processing a condition of mining licences and the like, with agreed time limits to move into the next stages. That conditionality was one of the incentives.
The general upgrade of the economic climate backed by significant investment in infrastructure almost tripled exports between 2017, the last year before the Second Republic, and last year.
This is why we now have growing gold and foreign reserves backing our currency and why the banking sector can handle, as a matter of routine, the foreign currency requirements for all businesses.
The Ministry of Mines and Mining Development is now expecting all minerals slated for export to be processed before the end of next year, ending the temporary quotas now in force and introduced to ease the transition by keeping mines in production, while the add-on plants were built, or rebuilt for some minerals such as chrome, and commissioned.
The ideal of beneficiation is hardly new. For several centuries the communities in Zimbabwe mined and panned gold, but when it was dispatched to the trading ports along the Mozambique coast it had to be in the form of almost pure gold.
In fact, Great Zimbabwe was financed through gold trade. The area of the complex is on easily the best route between the Midlands and Matabeleland gold fields and the Arab traders on the coast, allowing the local rulers of that area to build their spectacular complex.
Our new steel industry shows the need for beneficiation before export. While some countries with large iron ore reserves on their coasts do export iron ore, this was never a viable possibility for Zimbabwe.
We once exported cast iron, not an over-valuable product. But the investor for Manhize steelworks went the whole distance to making steel, and even then is moving up the industrial ladder from steel billets to bar and rod steels, with steel plate being the next stage when the rolling mill is commissioned in a future phase.
Manhize highlights the additional benefit in that downstream industries in Zimbabwe, in particular at the moment the construction industry, have an in-country source of processed materials.
Beneficiation of other minerals should drive local industrialisation as well, with lithium-ion batteries being an oft-stated goal, but only possible when lithium ores are turned into lithium salts.
We need to remember that a lot of the additional value is built on labour costs, that is the creation of new skilled jobs, so when there is in-country processing it might be funded by an external investor, but the people getting the pay cheques for the work are almost all Zimbabweans.
