The Zimbabwean unity government of President Robert Mugabe and Prime Minister Morgan Tsvangirai has commenced a review of the nation’s mining industry which will include a comprehensive review of all existing mining contracts.
Tendai Biti, the Zimbabwean Finance Minister, recently stated that government would re-evaluate all mining contracts and introduce a “use it or lose it” policy for the mining industry aimed at those entities that have been sitting on mineral deposits for a long time without exploiting them. The Minister affirmed that the government is working on new mining laws that comply with modern standards for the nation’s extractive industries. These standards are apparently a requirement to the receipt of funding from the World Bank to improve infrastructure. At present, growth in the mining industry is being hampered by poor electricity supplies which are meeting only about 60% of miners’ needs, according to Zimbabwe Chamber of Mines president Victor Gapare.
A previous mining bill, which was not signed into law, sought to seize 51% of all mine ownership for black Zimbabweans and the government. Naturally, this bill was not popular with foreign investors, many of whom commented that it would inevitably discourage investment in mining. Obert Mpofu, the Mines and Mining Development Minister, recently indicated that he was reviewing a bill “forcing foreign companies to sell stakes in their businesses to make it less harsh and attract badly needed foreign investment” (Reuters: 5 August 2009). The Minister further indicated that the “new proposals on changes to the laws will be submitted to the current sitting of parliament”. However, he refused to comment on whether the government would remove the 51% local ownership requirement as the proposals were still being debated.
The existing Zimbabwean mining laws and policies have led to the withholding of badly needed investment to raise production as Zimbabwe tries to recover from economic collapse. However, Minister Mpofu recently told an investment conference in Johannesburg that the legal review would seek to strike a balance between attracting investors and indigenisation. He also stated that the review would include views from others in the region such as South Africa, which has adopted a policy of black economic empowerment to include blacks in the mainstream economy after years of exclusion under apartheid.
Zimbabwe's Chamber of Mines holds the view that, with proper incentives through the implementation of the above measures, gold output could rise to 50 tonnes per year by 2015 (from 3.5 tonnes last year), while platinum output could reach 1 million ounces a year after 15 years (from 170,000 ounces during the current year).