Mugabe to Ask Investors to Dig Mines, Forget Farms: Week Ahead
Zimbabwe’s President Robert Mugabe will this week ask investors to plow their money into platinum, chrome and gold projects to help the country recover from a decade-long recession.
They’ll need to put aside concerns over a farm seizure program that destroyed Zimbabwe’s biggest export industry, recurrent threats of nationalization and a proposed law to force miners to sell 51 percent of their assets to Zimbabweans that the government now says is being reconsidered.
In what’s being billed as Zimbabwe’s biggest ever mining conference Mugabe will present a united front with Prime Minister Morgan Tsvangirai, the former opposition leader with whom he formed a coalition government. They are seeking investors to help them exploit the world’s second-biggest platinum and chrome reserves and companies to reopen idled gold mines and dig coal pits.
“There’s a number of issues that need resolution,” David Brown, the chief executive officer of Johannesburg-based Impala Platinum Holdings Ltd., the biggest investor in Zimbabwean mining, said in an interview. If the government makes the legal changes it promised “we’ll be in a much more positive frame of mind in terms of investment.”
Impala, which owns platinum mines in the country, has held back on investment plans worth about $750 million as it awaits clarity on mining laws.
Zimbabwe’s platinum reserves lag behind only South Africa. Along with Russia the three countries are the only nations with significant reserves of the metal used to curb car pollution.
“Zimbabwe could attract billions of dollars in mining exploration and development, provided the laws to make mining attractive are passed,” Tendai Biti, the country’s finance minister and an ally of Tsvangirai, said in an interview from Harare. Better mining laws “are expected before parliament soon.”
Companies including Lonmin Plc, Anglo American Plc and Rio Tinto Group have disposed of assets over the last 10 years. Production of gold, nickel, ferrochrome and coal has slumped.
Mugabe’s program of seizing commercial farms for redistribution to subsistence farmers deprived of land during white rule caused shortages of the foreign currency needed to buy equipment for mining and created concerns over the security of foreign owned assets.
Investors have also been deterred by threats to take over mines. In 2000 Mugabe said mines could be targeted after farm seizures were completed and in 2007 he said diamond mining would be reserved for the government after the state took back a concession following the discovery of the Marange diamond field by African Consolidated Resources Plc.
Mugabe, Tsvangirai and a number of other government officials will speak at the Sept. 16 and 17 conference in the capital, Harare. The coalition government was formed after mediation by Zimbabwe’s neighbors following disputed elections last year.
Tsvangirai and Biti have since sought investment from Europe to China to revive the economy, including a gold industry that was once the third biggest in Africa after those of South Africa and Ghana. While constitutional talks are yet to be completed, and there are disputes over government positions, politicians are trying to convince investors that the worst is over for the economy.
Some gold mines have reopened since February after the government abolished its currency, the Zimbabwe dollar, and switched to currencies including the U.S. dollar and the South African rand to tame the world’s highest inflation rate.
The conference will focus on reviving the mining industry and putting Zimbabwe back on the map as an “attractive mining destination,” the country’s Mines Minister, Obert Mpofu, said in an interview. There has “never been a better time” to invest, he added, referring to planned legal changes and an expected economic recovery.
The conference, hosted by the mines ministry, is expected to have over 500 delegates, according to the organizers, Johannesburg’s Utho Capital.
In addition to Impala, Aquarius Platinum Ltd. holds a stake in a mine in the country and Anglo Platinum Ltd., the world’s biggest producer of the metal, plans to dig one. Mvelaphanda Resources Ltd. and African Rainbow Minerals Ltd., both based in Johannesburg, are considering investing in Zimbabwe.
The country has the potential to produce ten times as much platinum as the 200,000 ounces it mines annually now, said Joel Mungoshi, a Mvelaphanda official who will speak at the conference.
Still, for now investors are more likely to have concerns about the country’s political stability than its metals and mineral reserves, said Mike Davies, an Africa analyst at Eurasia Group in London, in an interview.
Those worries include the “high level of control that’s left in Mugabe’s hands,” Davies said. (Bloomberg)