MUTARE– Positive growth in Zimbabwe’s mining sector could be greatly affected by increased government interference, a new report has revealed.
According to a report released by BMI Research, political and economic risks, coupled with increased government interference threatens to disrupt the industry’s development over the next few years.
BMI provides forecasts, data and analyses have been used by multinationals, governments and financial institutions to guide critical strategic, tactical and investment decisions.
“Zimbabwe is emerging as an important mining centre within Southern Africa as foreign investment drives growth in mineral and metals production. In particular, the country will rise in prominence as a producer of platinum, gold and diamonds; however, we note that the diamond mining sector is dead as it is currently not contributing meaningfully towards the country`s foreign currency earnings, a cabinet minister has said.
“However, Zimbabwe’s mining industry faces familiar challenges; not least a lack of sufficient mining and transportation infrastructure political and economic risks, coupled with increased government intervention, threatens to disrupt the industry’s development over the next few years,” reads part of the report.
The report points to consolidation of diamond mining operations and recent takeover of Zimplats land as key examples of how government interference will deter risk averse investors.
“Political risk is also an ongoing concern: government intervention in the diamond mining industry is likely to restrict foreign involvement in the sector amid ZANU PF’s plans to consolidate or nationalise the sector. More recently, we note the government’s seizure of mining land belonging to platinum miner Zimplats, a development that will concern foreign investors looking to the country,” noted the report.
Minister of Finance Patrick Chinamasa also accedes that government involvement has not spurred growth in the diamond sector, condemning gem mining as a dead venture.
Minster Chinamasa told captains of industry at a Confederation of Zimbabwe Industries (CZI) business meeting that consolidation has failed to improve diamond mining.
He said unlike tobacco, chrome, gold, platinum and nickel which have contributed immensely towards the country’s foreign currency earnings, diamond sector has proved to be dead.
“Since I became the finance minister, in 2014 budget, I projected 14 million carats but I never got anything more than 3 million.”
“As of now diamond sector is dead. The issue that got the sector to collapse is essential that we felt this sector was not contributing and we decided to consolidate it. In other countries like Botswana, Namibia and Angola the State is the dominant player in the mining of diamond,” said Chinamasa.