GOVERNMENT has raised concerns over lack of investment into exploration in mining amid palpable fears that without new mineral discoveries, the future of the sector was uncertain and unsustainable.
Mines and Mining Development Minister Winston Chitando, said there was a worrying streak of lack of investment into exploration on existing and virgin assets.
Mining generates about 60 percent of Zimbabwe’s annual export earnings.
President Mnangagwa’s administration has also designated mining, which contributes over 12 percent to GDP, and agriculture as major anchors of Zimbabwe’s economic development over the short to medium term.
As such, the minister said Zimbabwe ill-afforded lack of investment into exploration. Efforts are underway to expedite enacting a minerals exploration and marketing law, which has been long in coming.
The minister made these remarks during the Chamber of Mines annual general meeting in Victoria Falls, which ended on Saturday and was oversubscribed on the back of frenzied interest from both local and foreign investors.
Lack of investment into exploration, Minister Chitando said, was one of three major challenges besetting the mining industry; including lack of capital for expansion or developing new projects and low operating capacity.
Already, the mining sector requires an estimated $11 billion to sustain current operations as well as raise production over the next five years.
Notable too, the minister said, was the fact that out of the over 60 mineral occurrences in Zimbabwe, only 10 were being actively exploited.
These include gold, platinum, nickel, copper, chrome coal and diamonds.
Minister Chitando said as of December 2017, there were only three exclusive exploration licences, meaning that there was virtually no exploration taking place in Zimbabwe.
“This is not good for the long term sustainability of the (mining sector),” he said. The minister said the three factors weighing on the industry, including lack of exploration, were a result of perceptions on country risk.
However, perceptions on policy clarity and consistency, a legacy of ex-president Robert Mugabe’s administration, were also impeding investment into mining.
“But when the new administration came into place, there has been deliberate efforts to try and raise the much needed capital for mining projects.”
Expectations are high though, that the improved operating economic environment, thanks to the pro-reform and pro-business new dispensation, will open floodgates of funding opportunities into mining.
Government is targeting to grow mining, which Minister Chitando said was one of the largest industries not just in Zimbabwe, but worldwide, into an $11 billion industry by 2022 and $18 billion industry by 2030.
The world’s new darling, battery grade lithium, will play a key part in this vision.
The mining sector is forecast to earn Zimbabwe $3,7 billion this year, according to Finance Minister Patrick Chinamasa’s 2018 National Budget.
Minister Chitando said the first issue addressed to enable mining firms to access global capital markets was amending the indigenisation law to limit its application to only two minerals; diamonds and platinum.
Prior to the amendment, the indigenisation law compelled all foreign investors into the mining sector, for both Brownfield and Greenfield projects, to sell at least 51 percent stake to locals, individuals or institutions.
The Minister also said his ministry was holding weekly meetings with the chamber of mines to address ease of doing business issues for the mining sector.
“But more importantly is the message where we, as Government, have to be seen to provide policy consistency. At the same time, there have been a number of investment seminar sessions where we have tried to tell our story,” he said.
Chamber of Mines President Batirai Manhando, also bemoaned lack of investment into or little exploration in mining, saying despite Zimbabwe holding huge mineral potential, it remained largely under-explored, especially using the modern scientific methods.
“Since 2000, mining industry has received less than optimal investments in mineral exploration, both Greenfield and Brownfield,” the minister said.
According to S&P Global Market Intelligence Report for 2017 on mineral exploration trends non-ferrous metals expenditure increased to $8,4 billion from $7,3 billion.
Africa attracted 14 percent of that budget, which went mostly to DRC, Burkina Faso, Tanzania and South Africa.
“If our mining industry is to sustain growth, we must as a matter of priority focus on attracting a significant portion of the Africa targeted exploration capital,” Mr Manhando told delegates at the AGM.