Zim continues to attract mining investors

high-risk rating.
Impala Platinum Mines (Implats), which owns the majority stake in Zimbabwe Platinum Holdings, is set to invest US$714 million (R5 billion) in the local platinum producer as part of its R29 billion capital expenditure, part of which will go into its US$500 million Ngezi Phase 2 expansion programme.
Implats recently announced the R29 billion capex budget for its southern African operations (in South Africa and Zimbabwe).
In January, Implats chief executive officer Mr David Brown hinted at a possible Phase 3 expansion at Zimplats funding, which will be considered in the next five to ten years.
This is despite the fact that the country has been rated poorly as a mining destination, according to the Fraser Institute’s 2010/2011 Survey of Mining Companies.
The survey shows that the country has been ranked among the bottom 10 mining destinations together with countries such as the Democratic Republic of Congo and Venezuela.
According to the survey the bottom 10 scorers are Indonesia, Zimbabwe, Wisconsin, Madagascar, India, Guatemala, Bolivia, the Democratic Republic Congo, Venezuela, and Honduras.
Neighbouring South Africa scored 23.4 in the survey, marginally ahead of Zimbabwe, which scored 22.4 points.
Nonetheless, Zimbabwe has seen significant investments in the mining sector despite the negative perceptions, as illustrated in other mining expansion programmes including those at Unki and Mimosa.
The Fraser Institute survey, which is carried out on an annual basis, on 3 000 metal mining and exploration companies to assess how mineral endowments and public policy factors such as taxation and regulation impacts investment, ranks Zimbabwe 71 out of 79 countries under its Policy Potential Index (PPI).
According to the Fraser Institute, the PPI is a composite index, measuring the country’s overall policy attractiveness taking into account the effects on exploration of Government policies including uncertainty concerning the administration, interpretation, and enforcement of existing regulations.
Environmental regulations; regulatory duplication and inconsistencies; taxation; uncertainty concerning native land claims and protected areas; infrastructure; socio-economic agreements; political stability; labour issues; geological data base and security are some of the factors considered.
Although Zimbabwe is endowed with a vast resources base, including the world’s known second largest platinum reserves, the country is presently perceived as not investor-friendly.
Some observers have noted that some of the country’s policies in respect of mining taxation and regulation are not business-friendly.
Meanwhile, four of the top 10 attractive mining destinations are Canadian provinces of Alberta, Saskatchewan, Quebec and Manitoba.
The index is normalised to a maximum score of 100.
Accordingly, a country that ranks first in “encouraging investment” response in every policy area would have a score of 100 while one scoring last in every category would have a score of 0.