Zimbabwe ‘one of worst mining jurisdictions’Comment on this story
Tawanda Karombo Harare
Global mining investors fear and loathe Zimbabwe because of inherent uncertainties regarding its “environmental regulations, the legal system and taxation regime”, as well as trade barriers and the poor quality of its geological survey, a new survey shows.
Zimbabwe has the largest platinum reserves after South Africa and boasts vast deposits of other metals and minerals, including gold, nickel, diamonds, coal and chrome.
Mining companies in the country are, however, battling for the restoration of certainty in the operating framework and want the government to fix issues such as high royalty rates on mineral sales.
This week Canadian think tank the Fraser Institute ranked Zimbabwe among the five worst jurisdictions for mining investments.
Zimbabwe has put platinum mining companies under pressure to set up a smelter and says it has shortlisted two unnamed firms to build the refinery, which could cost as much as $3 billion (R32bn).
Zimbabwe’s poor ranking comes hardly a week after the government shot down the Chamber of Mines of Zimbabwe’s presentations and calls for a gradual increase in enhancing mineral beneficiation.
Minister of Mines and Mining Development Walter Chidakwa said last week that the need for a refinery was no longer debatable and maintained that a 15 percent levy on raw platinum exports would remain in place, at least for now.
Alana Wilson, a senior economist at the Fraser Institute, said: “Zimbabwe’s lowest scores on the Survey of Mining Companies 2013 were for uncertainty concerning environmental regulations, the legal system, the taxation regime and disputed land claims, as well as infrastructure, trade barriers, and the quality of the geological survey. For each of these factors, no respondents rated that these factors ‘encouraged investment’.”
He said mining was a “long-term and risky endeavour and mining companies must be confident in the stability and predictability of the regulatory regime” to invest.
“In order to enhance the country’s attractiveness, Zimbabwe must provide stable, transparent, and predictable regulations and a legal system that is regarded as fair, transparent, non-corrupt, timely and efficient,” Wilson said.
About 30 percent of respondents surveyed by the Fraser Institute identified Zimbabwe’s legal system “as a strong deterrent to investment”, while trade barriers were also rated by 30 percent of respondents as a strong deterrent.
Major South African mining firms such as Impala Platinum, Aquarius Platinum, Anglo American Platinum and Metallon Gold are maintaining their investments in Zimbabwe. However, any prospects the country has of attracting more mining sector investors are waning owing to growing investor scepticism over the certainty and safety of investments.