Hope For Mining Industry
Under New Govt in Zimbabwe
By Gavin du Venage, South African Editors
Of significance to the local mining industry, the big loser in the events was Mugabe’s wife Grace, whose plans to replace her 97-year-old husband were brought to an abrupt end. It was also Grace whose supporters included a faction behind the drive to “indigenize” the country’s mines — that is, hand over controlling shares to black Zimbabweans. Zimbabwe is the world’s third largest platinum producer and has working gold, chrome, diamond, lithium and coal operations, among others.
“We are glad to see her gone, Grace and her clique were going to get their hands on our operations, sooner or later,” said a Zimbabwe mining executive via phone from Harare, on condition of anonymity. “We don’t think Mnangagwa is cut from the same cloth. He knows the value of mining and wants the sector to prosper.” Within hours of the coup the Mugabe’s were under virtual house arrest. Their supporters were either rounded up or on the run. Among them was minister for indigenization, Patrick Zhuwao, who was out of the country at the time and is now reportedly hiding out in neighboring South Africa.
Zhuwao was a key mover behind indigenization, and wanted 51% of mine ownership transferred to local black ownership, without compensation. The push for indigenization over the past half-decade or so has hung as a constant threat to the local industry. As a result, investment in new operations dried up. Even China, one of Zimbabwe’s main trading partners disapproved of the uncertainty indigenization engendered.
“This policy was too radical and Chinese companies there stood to suffer,” said Wang Hongyi, a research fellow on China-Africa ties at the Chinese Academy of Social Sciences, China’s state think tank, Bloomberg reports. “Mnangagwa is seen as a steady hand, and he will limit or even revoke the indigenization law.” Few are under the impression Mnangagwa heralds a return to democracy. A former guerilla leader during the Rhodesian bush war, he ran Mugabe’s military and spy apparatus for much of his career. He has been blamed for numerous human rights violations during this era, including the Matabeleland massacres in the early 1980s that saw thousands killed during the early years of Mugabe’s rule.
He also commanded the military during its involvement in the Democratic Republic of Congo’s civil war in the 1990s. During the conflict, Zimbabwean generals profited handsomely from pirate mining operations that saw copper and diamonds plundered in large quantities. Currently, the military also has a stake in operations at the Marange diamond field east of the capital Harare, together with local and Chinese business interests. Human rights body Global Watch has accused the military of deploying soldiers to force local villagers to dig for diamonds at gunpoint.
Since 2010, Zimbabwe has officially exported more than US$2.5 billion in diamonds, according to official figures from the Kimberley Process. Global Witness says, however, that limited available government reports show only around US$300 million of this can clearly been identified in public accounts.
Marange, however, is a series of shallow deposits that requires little in the way of technology or mechanization to extract, and so remains a relatively low-tech operation. Mnangagwa will be aware that the platinum, gold, chrome operations etc. require a different approach.
With unemployment at 80% and the economy flatlining, Mnangagwa will need to improve the country’s fortunes quickly if he is to consolidate his presidency. This will require among other things largescale investment in mining technology, particularly for the expansion of underground operations in the platinum, chromium and other sectors.
“We’ve lived with the fear that our operations will be taken away from us for so long, and now the ‘old man’ is gone,” said the Harare mining executive. “Mnangagwa might not be a saint, but he will leave us alone to get on with our business.”