Chronicle Editor
Yoliswa Moyo, Features Editor
There is no doubt that Zimbabwe was up a creek without a paddle when illegal sanctions were imposed on the country some two decades ago following the land reform programme.
The restrictive measures, which exist in the form of targeted sanctions as well as multilateral financial restrictions, have seen the country’s access to international credit markets being blocked.
International norms which must be respected in the conduct of international engagement, foreign policy and diplomacy, that is non-intervention and state sovereignty are also choked by these sanctions.
According to research, Zimbabwe lost an estimated US$42 billion and another estimated US$4,5 billion annually for more than two decades. Another staggering US$2 billion was lost in IMF, World Bank and African Development Bank loans.
For years, the country has experienced unending economic turmoil with hyperinflation and dwindling wages becoming a bone of contention in many households.
But, despite these economic embargoes, the country’s extractive industry has proven resilient as more investors trek into the country and the US$12 billion mining milestone is slowly becoming a reality.
The country’s mining sector recorded a production increase of over 20 percent in the second quarter of the year, a strong affirmation of growing investor confidence as the sector is attracting fresh investments running into billions of dollars in high-impact projects across mineral sub-sectors.
Renewed investment interest in the mining sector has seen the establishment and expansion of critical mining operations across the country with the gold sector expected to deliver the 100-tonne target.
Leading mining companies such as Blanket Mine, Pretoria Portland Cement (PPC) and Duration Gold are already seized with the implementation of different expansion projects that involve millions of United States dollars.
These are being complemented by artisanal small-scale mining breakthroughs in different resource districts, which have seen the sub-sector contributing more to formal gold deliveries.
Blanket Mine, which is owned by Caledonia Corporation, completed a new central shaft project under a US$70 million expansion project and switched on its US$14 million solar plant to enhance its energy supply.
The investment is already impacting positively on improved quarterly output with the company now officially trading on the Victoria Falls Stock Exchange (VFEX).
PPC, which operates a clinker production plant in Colleen Bawn, Matabeleland South, has also maintained steady operations and recently unveiled a US$40 million solar power investment for its Bulawayo and Colleen Bawn plants, which will boost the firm’s energy requirements and help reduce the supply gap in the country.
Duration Gold subsidiary, Vubachikwe Mine, recently launched its US$2,6 million Tailings Storage Facility (TSF), which is expected to extend the mine’s depositional life by a further 20 years.
Duration Gold Limited embarked on an airborne geophysical survey through partnership with world leader Xcalibur Airborne Geophysical Surveys from South Africa, in a bid to have a better appreciation of the country’s mineral potential. The establishment of a US$1 billion iron ore mining and value-addition industrial park in Manhize, Chirumhanzu District, Midlands Province is also expected to positively impact the country’s extractive sector and assist Zimbabwe to wean itself from reliance on imports.
Lithium is the booming mineral in the Zimbabwean mining sector, with world demand rapidly rising as manufacture of lithium-ion batteries soars and Zimbabwe holds one of the largest reserves in Africa of the preferred hard rock deposits and the most easily accessible.
Lithium has become a much sought-after mineral across the world as the automotive industry is shifting towards electric cars that among other valuables use lithium-ion batteries. Several investments are rolled out in the sector.
For instance, the sector is primed for a massive investment outlay with Kuvimba Mining House (KMH) developing a US$3 billion Sandawana Mine and more than 600 000 tonnes of high-grade lithium ore valued at over US$216 million has been mined and stockpiled.
Sandawana Mine which has a high-grade lithium deposit mine is located in Mberengwa District. The plant is expected to be commissioned soon.
Several Chinese mining companies are aggressively heeding calls by the Government to open lithium processing plants.
China’s Huayou Cobalt commissioned a processing plant at Arcadia Lithium Mine which has since successfully produced the first batch of lithium products under trial production.
For most Chinese mining companies, it has not been challenging to place their capital on the plants and this has paved the way for other players to invest in the country’s lithium mining industry.
Three Chinese companies — Zhejiang Huayou Cobalt, Sinomine Resource Group and Chengxin Lithium Group have invested massively in lithium projects in the country, totalling US$679 million over the past three years.
Huayou Cobalt and Chengxin Lithium are developing processing plants. China Sinomine Resource Group operates Bikita Minerals Lithium Mine in Masvingo — the country’s largest lithium mine with an estimated 11 million tonnes of lithium ore reserves while Shenzhen-listed Chengxin Lithium Group acquired a 51 percent interest stake in Sabi Star Lithium Mine in eastern Zimbabwe for US$77 million.
There are several Chinese investors and others from elsewhere who are moving into various parts of the country to harness lithium ore reserves.
United Kingdom (UK) listed firm, Marula Mining has announced plans to establish a valued-added lithium operation, Muchai Mining in Bikita in Masvingo province.
Lithium has emerged as a leading mineral which is expected to spur Government’s plans to grow the mining industry to earn about US$500 million a year.
The new projects have seen a significant increase in mining output in recent years, with corresponding export earnings and massive job creation impact along the value chain.
The mining sector is a key player in the country’s economy, contributing more than 60 percent of Zimbabwe’s export receipts and attracting more than 50 percent of foreign direct investment (FDI).
The sector also contributes about 13 percent to the Gross Domestic Product and generates significant downstream business and revenue injection to the fiscus through taxes.
The Zimbabwe National Statistics Agency (Zimstat) recently released an Index of Mineral Production for the second quarter which indicates that overall mineral production was over 144 percent, reflecting more than 20 percent increase against 119 percent recorded last year.
“The index of mineral production for the second quarter 2023 stood at 144,3, reflecting a year-on-year percentage increase of 20,5 percent compared to the second quarter 2022 value of 119,8. The quarter-on-quarter comparison showed an increase of 8,6 percent from 132,9 recorded in the first quarter 2023 to 144,3 recorded in the second quarter 2023,” reads part of the report.
According to the report, the output index for gold in the quarter under review was 123,0, reflecting a 26,7 percent increase when compared to 97,1 recorded in the first quarter. The platinum output index for the quarter was 139,1 with the year-on-year index increasing by 25,4 percent from 110,9 in the 2nd quarter 2022.
A recent World Platinum Investment Council (WPIC) report noted that Zimbabwe’s 2023 platinum production is set to reach an all-time high of 502koz, representing a five percent year-on-year increase largely driven by expansion at Zimplats.
Zimbabwe is the world’s third-largest producer of platinum after Russia and South Africa and Zimplats, Unki, and Mimosa are the country’s major producers of platinum.
Diamond recorded an output index of 261, 2 in the period under review compared to 205,9 in the second quarter of 2022. Year-on-year comparison showed a 26,8 percent increase.
The second quarter output index for copper was 141,7. The year-on-year index analysis shows an increase of 78,5 percent from 79,4 in the period under review.
The mining sector has recorded a cumulative total of US$20,2 billion in export earnings in the past five years spurred by the improved investment climate ushered in by the Second Republic.
International investors have also grabbed the opportunity in the sector bringing in new technologies and promoting value addition and beneficiation of local minerals.
While a lot has been achieved despite the economic embargoes that choke the beautiful motherland, the country’s extractive industry can yield so much if the sanctions are lifted.
Bongani Ndlovu