ZIMASSET – Prospects for Mineral Value Addition and Beneficiation in Zimbabwe: Benefiting from our minerals

06 May 2015

ZIMASSET – Prospects for Mineral Value Addition and Beneficiation in Zimbabwe: Benefiting from our minerals

The resources of African countries have attracted the attention of Multinational Corporations (MNCs) from across the worlds, who have continued to rip huge benefits and make rich pickings from the same. However, there is very little to show for these resource riches in the host countries, to the extent that some have begun alluding to a “resource curse’’ of sorts that has been cast upon them. In the recent past most of these developing countries have awoken to the reality that these resources must bring benefits and economic development to the inhabitants of the host countries as a result of civil protest and lobbies that have emerged from the population. Minerals as valuable as diamond, platinum, gold, topaz, nickel, coal, gas, oil, chrome, iron, zinc are in abundance in poorer countries but foreign companies continue to get benefits unduly at the expense of locals.

Resource dependency has been the downfall of most developing economies as they are heavily reliant on the one major mineral that earns foreign currency and export receipts for the country. This concentration is evident in the economies of Botswana reliant on diamond, Zambia dependent on copper, Namibia on zinc exports, Nigeria and Angola reliant on crude oil exports. The same story is replicated across the whole of Sub Saharan Africa from Ghana, Tanzania, and Equatorial Guinea, where these economies are heavily reliant on one product, crop or mineral.

The dominant paradigm in minerals exploitation is that only foreign companies have the financial wherewithal to invest in huge capital intensive resources exploration and exploitation to the detriment of local investors. The government also on the other hand is more willing to support MNCs by giving them huge tax incentives and other exemptions without due regard to the fact that the same support granted to local indigenous companies holds for better sustainable developmental prospects in the long run. Stories abound of MNCs who after enjoying long tax holidays chose to dump their local operations citing viability problems without giving credence or adequate evidence to that effect. 

However, on close analysis it is clear that the relevant policy communities’ in the specific policy sector would not have been consulted on their inputs. This usually leads to accusations being traded of public officials and local civil/traditional leaderships being bought off in the signing of these lucrative mining contracts. Cases abound of these instances. Other cases also are evident of executives of State Organisations who are entrusted with the responsibility to represent the interest of the State losing relevance as they would have been co-opted into the operations of the MNCs and they end up serving their own interests instead of behaving according to their mandate. A paradigmatic shift is therefore required in the way mineral resources and mining claims are managed. The principal objective being to put in place safe guards to ensure that local communities and the national economy benefit more, ahead of the MNCs.

The Community Share Ownership Scheme model of the Zimbabwean indigenisation policy needs refashioning in order for it to be more robust in the way it ensures the resources are harnessed for the benefit of the host country, which has these minerals. The example of more developed economies like China, Japan, India, Russia, Venezuela, Norway, and the Oil and Petroleum Exporting Countries (OPEC) of the Middle East should be learnt from. These countries have harnessed their natural resource endowments to bring about socio-economic development and rapid advancements to the wellbeing of their citizens. The cases in point here are of the Emirates which have transformed the hitherto desert City-States areas into metropolitan trade centres with thriving local economies. Another case in point for example, is that of the Norwegian Sovereign Wealth Fund which has accumulated US$1 trillion, (a mean sum) from prudent management of non-renewable resources, principally oil and fisheries.

These enviable success stories can and must be translated to the African continent. Some African countries have come on board and crafted similar programmes. Zimbabwe holds great potential of growing such a fund through mining in and on the Great Dyke and other resource rich areas around the country, chiefly Marange, Chimanimani amongst others. More still needs to be done for this to be a reality.

However, without the adept political maneuvering that is characteristic of the negotiations in the huge mining contracts, developing countries still stand to lose out on getting the full benefits from the exploitation of their mineral resources. What is needed are knowledgeable experts with the requisite skill, tact and passion to negotiate (in good faith) for the nation at large. The selfish ways of the past must be discarded and a more pragmatic approach adopted. This writer envisages not individuals taking upon themselves this task, but a group of experts called upon occasionally to thoroughly interrogate all new mining deals with the aim of getting the best from our resource riches.

The need for local minerals beneficiation and value addition is now more imperative than ever before. There is absolutely no reason why Zimbabwe should not shine among the best nations in this world, and in our lifetime. It has all the necessary prerequisites to achieve success; all that’s left is for the country to connect the dots.