Zimbabwe's biggest gold mine re-opened
HARARE – Zimbabwe's biggest gold miner has re-opened two of its mines which it closed down due to viability problems.
Metallon Gold chief executive Collin Gura said the mines were being re-opened after the company secured a US$15 million line of credit from local and foreign banks.
The African Export-Import Bank had agreed to lend the company US$10 million, while an unnamed local bank would provide US$5 million.
"The money will basically go towards working capital and then refurbishment of plant and equipment," said Gura.
The company, which is controlled by a South African mining group, owns five gold mines in Zimbabwe which it had all closed due to viability problems.
The problems centred on hyper-inflation of more than two trillion percent, and the unviable prices Zimbabwe’s central bank – then the only authorised gold buyer – offered for the precious metal.
But a new coalition government sworn into office in February has been able to reverse the inflation spiral and liberalised gold trade.
Miners are now allowed to market their own gold, and to retain all earnings.
Zimbabwe has also scrapped the worthless local currency and replaced it with major world currencies such as the British Pound, US dollar and the South African Rand, further improving business viability.
Since then, most mining companies have rushed to re-open operations they had closed down, while hordes of foreign investors have visited the country to scout for investment opportunities in the industry.
Mr Tsvangirai spoke in London at the end of a three-week tour of western capitals, in which he attempted, with limited success, to win financial backing for the coalition government formed earlier this year.
During the trip – in which he has met Barack Obama, US president, and other world leaders – the former trade union leader has repeatedly evoked the lesson of Nelson Mandela’s first post-apartheid government in South Africa as a model for Zimbabwe.
However, western governments remain wary of Mr Mugabe’s continuing influence in the country, which has spiralled into political and economic crises. Mr Tsvangirai has raised an estimated $150m (€106m, £91m) in fresh aid during the trip, but this will be channelled through non-government organisations, leaving the government with a substantial funding gap.
Addressing a conference of mining investors on Tuesday, Mr Tsvangirai, who shares executive power with Mr Mugabe, a man who he called “at one time a sworn enemy”, appealed for foreign investment in Zimbabwe’s mining industry as the best means of restarting the economy. Smaller companies such as Impala Platinum and Mwana Africa are already investing there, but political risk has kept away big mining investment.
Mr Tsvangirai said Mr Mugabe’s indigenisation laws, introduced more than a year ago and intended to enforce 51 per cent Zimbabwean ownership of enterprises, had scared off investors. In the year leading up to last year’s disputed presidential elections, the law was held up by investors as one reason why foreign capital was not developing Zimbabwe’s rich gold, nickel, platinum and diamond deposits.
Changing the laws was now “an urgent matter that needed to be dealt with”, Mr Tsvangirai said, outlining a series of incentives that included “rational” royalty and corporate tax levels in the local mining industry. “We need to find a level of [local ownership] that you find comfortable and we find beneficial,” he said.
The indigenisation and economic empowerment law, approved by parliament in 2007 to chart a “path to prosperity” for Zimbabwe, provides that foreign-owned companies and those owned by people not disadvantaged during colonial times (whites and Asians) must sell 51 per cent of their shares to indigenous (black) Zimbabweans.
Mr Tsvangirai, who as an opposition leader was beaten up by government backers and whose supporters have over the last decade faced brutal intimidation from state agents, insisted that the coalition government was workable and committed to progress. In his interview with the Financial Times he said Mr Mugabe and factions of Zanu-PF, the dominant party, would not deter the moderate, investor-friendly reforms the government launched when the economy was dollarised in February.
“The historic mistrust is there,” he said. “But in spite of this we are telling you that this process is irreversible. President Mugabe cannot stop the irreversible gains we have already made.”
Zimbabweans now use mostly US dollars and South African rand for transactions. The move is credited with rejuvenating trade and restoring goods to shop shelves, although the industrial sector remains moribund.
The “ideal” political solution for Zimbabwe, Mr Tsvangirai said, would be for Mr Mugabe to leave office after elections in two years. “But he is also part of the solution,” he said, as no progress would be made while the two men were at cross purposes.
The government would not seek an active role in a recovery led by the private sector, he added. “We have lost skills and we have lost money. What little there is should be spent on the education of our children and the health delivery system and not on enterprises in which other entities are better suited. The partnership we seek is one in which the state enables the private sector to thrive.”
A minister from Mr Tsvangirai’s delegation said the Zimbabwean currency, in which citizens had no confidence, would not be reintroduced.