eBusiness Weekly
Golden Sibanda
Zimbabwe is among a majority of African countries that have, for decades, continued to be haunted by the tag of the so-called” resource case” over their failure to fully use their mineral wealth in order to transform their economies.
Apart from the topical issues of accountability and transparency, resource rich nations have also failed to maximise returns from the mining sector due to deficiencies in national policies that should drive beneficiation and value addition.
In this context and generally speaking, the beneficiation of mineral resources refers to the processing of mineral rich ores to separate the valuable mineral products from the resources’ associated waste rock or impurities.
The extent to which such processes are done determines whether the product is classified intermediate in its purity and should be processed further or is refined, ready for further value addition through manufacturing.
Zimbabwe is currently encapsulated in the paradox that despite having more than 40 different mineral occurrences, it is asphyxiated by economic challenges and foreign currency shortages.
Ironically, not only is Zimbabwe endowed with a diverse mineral, it also holds vast quantities of the commodities. It is for this reason that mining firms must, without hesitation, fully embrace beneficiation and value addition.
The country is home to the world’s second largest platinum group metal and chromite deposits, after South Africa, and has a high gold yield per square kilometre, huge deposits of iron ore, Nickel, copper ore, lithium and possibly oil and gas.
Already, the mining sector contributes over 60 percent of Zimbabwe’s total annual exports, accounts for 16 percent of the country’s gross domestic product (GDP) and an estimated 6 percent to 10 percent of total formal employment.
The southern African country has a huge and highly diversified mineral resource base dominated by two prominent geological features namely the Great Dyke and ancient Greenstone Belts also known as Gold Belts.
But despite the fact that resource-rich Zimbabwe, just like many of its peers on the African continent, does not or has not been able to get full benefit from its minerals, the sector is still expected to drive growth in the short to medium term.
Possibly, what Zimbabwe and its African colleagues suffer from is the longtime negative impact of policies that have not sought or included strategies to unlock the economic potential embedded in its mineral resources.
It is against this reason that the continental mother body, African Union, came up with a policy framework in 2009, The Africa Mining Vision, for the continent to optimally exploit and benefit from its minerals. Everyone must tag along.
Not lost to the collective ideals of Africa fathers, President Mnangagwa, while noting efforts in a few areas, last week challenged local mining firms to urgently start pursuing effective strategies to beneficiate and value add minerals.
Addressing the Chamber of Mines of Zimbabwe Annual General Meeting and Conference in Victoria Falls, the President commended the few that have taken heed and implored those still lagging behind to hitch the ride.
He said that investment opportunities abound in the mining sector while the optimal exploitation of the extractives should ensure they continue to generate over 60 percent of the country’s annual export earnings.
President Mnangagwa said exploiting the full potential of mining in order to transform the domestic economy was critically important for the sector to continue providing significant employment opportunities.
“Guided by the Africa Mining Vision and National Development Strategy 1 targets, the sector is challenged to ensure equitable and inclusive broad-based development through enhanced beneficiation of our mineral endowments,” he said.
With a target to grow the sector to US$12 billion industry by 2030, the President said miners should take measures to optimise benefits from Zimbabwe’s mineral wealth, as this had potential to improve the living standards of citizens.
“This would augment the industrial development focus on value addition and beneficiation, export-led industrialisation and job creation among other things. Execution of commitments for the establishment of beneficiation plants should be urgently pursued,” the President said, adding that he had noted efforts by players in platinum, chrome and lithium.
Zimbabwe is not alone in this. Aspiration one of the Agenda 2063 highlights the importance of the beneficiation of Africa’s natural resources just like the Africa Mining Vision, which advocates for resource-based industrialization.
As such, in a demonstration of Government’s resolve to break ranks with the past on optimising Zimbabwe’s mineral potential, Treasury has also demanded a transition to beneficiation and value addition.
Finance and Economic Development Minister Professor Mthuli Ncube said that mining companies in Zimbabwe must now focus more on beneficiation and value addition rather than ship predominantly raw exports.
The Treasury chief said, at an average growth rate of 7,2 percent, the mining sector is expected to grow faster than targeted average economic growth of 5,2 percent over the course of NDS1, which runs from 2020-2025.
“Mining is the largest foreign currency earner (circa US$3.2 billion), but we also want to make sure that it moves away convincingly from just extraction to value addition and that job creation and export growth are further enhanced,” he said.
The policy thrust by the Government must be applauded in that it will allow the country to realise more from its finite resources, grow revenue and the economy as well as create new jobs.
But it must be stressed the Government still needs a policy framework, that entails carrot and stick strategies, to drive expedited progress towards notable and meaningful value addition and beneficiation of minerals.
A study by economic think tank, the Zimbabwe Economic Analysis and Research Unit (ZEPARU) showed that while a number of mines have responded, many others are still far behind while the level remains too low.
ZEPARU says, in its research findings, the Government’s policy position on mineral beneficiation and value addition is aligned with the regional and continental initiatives on mineral beneficiation and value addition.
“The Government of Zimbabwe prioritizes beneficiation of diamonds, chrome, platinum group metals (PGMs), nickel and coal bed methane (among others),” ZEPARU said in its study.
The quasi-Government research institution stated: “Zimbabwe has not fully exploited these mineral resources for growth and development, a case which is sometimes argued as resource curse.”
Zimbabwe is still characterised by a high dependency on exports of unprocessed or semi-processed mineral products, which results in the country being a price taker, ZEPARU noted.
“The decline in commodity prices negatively affects revenue which ultimately impacts on government planning.
“However, it is common knowledge that the prices of value-added metal products such as jewellery, electronic products, etcetera, seldom fall in response to the drop in the prices of gold, platinum or related metals from which the products are made.”
Trade theory argues that with time the price of primary commodities will decrease in relation to that of manufactured goods, resulting in countries specialising in primary commodity exports experiencing a detrimental economic effect.
“The fact that 60 percent of world trade is in intermediate products strengthens the case for value-addition and beneficiation in Zimbabwe, hence the need to move away from export of raw and semi-processed minerals,” ZEPARU said.
