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Deputy Prime Minister Prof. Arthur G.O. Mutambara’s address to the chamber of Mines AGM at Nyamga on Developing and Managing the Mineral Wealth of Zimbabwe for Tomorrow
May 17, 2013
THE mining sector in Africa constitutes one of the largest industries in the world. Africa is the second biggest continent, with 30 million km² of land, which implies large quantities of resources.
For many African countries, mineral exploration and production constitute significant parts of their economies and remain keys to economic growth. The continent is richly endowed with mineral reserves and ranks first or second in quantity of world reserves of bauxite, cobalt, industrial diamond, phosphate rock, platinum-group metals (PGM), vermiculite, and zirconium. Gold extraction is the key driver of Africa’s mining activities.
However, in spite of this rich mineralization, African countries are still walloping in poverty. The primary problem has been the racist and colonial natural resource laws in Africa which empower the investor at the expense of the citizenry who are the bona fide owners of the resource. Based on this flawed framework, most of the mining deals and activities on the continent have been opaque and detrimental to Africans.
Corruption by both public sector and private sector players has compounded the malaise. Secondly, mining in Africa has been largely extractive without beneficiation or value addition. This has led to African countries exporting cheaply priced raw commodities, while importing expensive refined products.
The lack of meaningful benefits to African people from their natural resources is a key part of what is currently being described as leakage of resources from the continent. African leaders and industrialists need to make a lot more noise about the leakage of money from the continent. Plugging the leaks is one of the major ways of keeping Africa’s growth steady.
If this is addressed we will have enough resources on the continent. We will have sufficient investable capital from the continent. This will smash the current unsustainable over-dependence on foreign aid and foreign direct investment. Intra Africa investment and investment outflows from the continent into the rest of the world will become practical propositions.
African governments and societies must harness the opportunities created by natural resources effectively. They must ensure the huge opportunities for economic development and prosperity provided by resource discoveries and commodity booms will never again be missed.
Some of the poorest countries in Arica have large amounts of natural resources and these can provide a pathway out of poverty. Yet in the past, these opportunities have often been missed, and resource abundant countries have consequently remained poor. Natural resources have the potential to be transformative if they are properly harnessed for development.
However, the decision and value chain from the discovery of natural assets through to their conversion into a productive economy is long and complex with many state and non-state actors involved. This is why the process has so often been unsuccessful on the African Continent. Africa is too rich to be poor.
It is within this continental context that we assess Zimbabwe’s mineral strength and how it can be leveraged to improve the quality of our people’s lives. The recent work of Paul Jordan and ZEPARU has been instructive in identifying the key policy issues with respect to the mining sector in Zimbabwe, in particular around geological and mineralization issues. Their research findings must inform and lay foundation to discussions in the Chamber of Mines.
Zimbabwe has a rich and diverse mineral resource base that should be an important contributor to sustainable growth and development. The sector has rebounded dramatically from the hyperinflation economic crisis and, with dollarisation, the value of mineral production has increased six-fold to about $3 billion in 2011. However, if this increased mining activity is to ultimately result in more than just holes-in-the-ground, the crucial mineral linkages need to be realized whilst the resources are still extant.
Zimbabwe has an extensive mineral value proposition. These mineral assets are mainly found in the following geological formations and bodies: The Greenstone Belts: Gold and silver, as well as considerable resources of iron ore, nickel, copper, cobalt and podiform chromite, also chrysotile asbestos (Mashaba Igneous Complex), limestone, pyrite and antimony; The Great Dyke: PGMs5 & Au with associated copper, nickel and cobalt. Also, chromium (chromite seams), as well as minor asbestos and magnesite; The Magondi Supergroup: Copper and silver (Dewera Group); The Karoo Basins: Considerable bituminous coal, coking coal, anthracite and coal-bed methane (CBM) resources; The Carbonatite Igneous Complexes:, phosphate (Dorowa, Showa); Kimberlite pipes: diamonds (Morowa, River Ranch); Pegmatites: Lithium minerals, columbite-tantalite, cassiterite, et al; Recent alluvial & placer deposits: Gold and diamonds (from Umkondo conglomerates).
Paul Jordan and his colleagues have emphasized that in order to optimize the economic linkages the current “colonial” minerals governance regime of “free mining” needs to be fundamentally overhauled to both encourage the discovery of new mineral deposits and maximise the developmental impact of known mineral assets through public tender against developmental outcomes. In this regard, a Mineral Cadastre Information Management System (MCIMS) being developed by the Ministry needs to be operationalized quickly.
The current historically high mineral prices fueled by strong Asian appetite are likely to continue for the next couple of decades, so long as the major Chinese and Indian economies continue to display robust growth. Zimbabwe needs to take advantage of this window of opportunity to use its finite mineral resources endowment to catalyze wider national economic growth and development through the maximization of the key economic linkages.
Zimbabwe’s mining sector has continued to be the lead in economic performance, contributing an estimated 16% to GDP in 2012, up from 13% in 2011. The sector also continued to lead in export earnings, rising to USD2 billion in 2012, from USD1.8 billion in 2011. The major drivers of this growth in export earnings were diamonds, platinum and gold. Overall, mineral production maintained its upward trend, meeting most Medium Term Plan (MTP) projections for 2012. This year, 2013, looks no different, assuming the current momentum is maintained.
Militating against higher growth rates, however, is the unavailability of medium to long term credit facilities for working capital and recapitalization requirements, as well as perennial power shortages. These enablers, if they remain unresolved, will continue to be major impediments to potential growth targets. Being number six in the world in terms of diamond deposits (potential control of about 25% of world diamonds), having 90% of world platinum between us and SA, and having extensive Gold deposits, Zimbabwe has massive natural resource potential. In fact, in terms of what is called natural resource per capita, we are number one in the world. So, why are we poor? Why are we hungry?
This 74th AGM of the Chamber is fortuitous as it occurs while we are currently fashioning a new mining policy framework leading to new Mines and Minerals Act. This policy seeks to ensure the sustainable development of the mining industry and its contribution to the economy.
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