eBusiness Weekly
Zimbabwe needs new sources of export earnings to fix the foreign currency imbalances, needs new jobs for its people and needs general development. The investment of $165 million by Prospect Resources of Australia in the new Arcadia Lithium Mine in Goromonzi is thus a good step forward making a significant contribution to all three requirements.The investor received a very warm welcome from President E. D. Mnangagwa at the ground breaking ceremony this week with the President making it clear that foreign investors were desirable and that the Government was determined to smooth their path.
Zimbabwe needs not just more exports but an ever richer mix of exports. Relying on two or three products can cause problems if there is a market slump in one of them. And when it comes to mining a pure industrial mineral, such as lithium, is less likely to be subject to weird market fluctuations than say gold or gem diamonds, where prices can yo-yo alarmingly.
Lithium is one of the minerals of the future. Demand only became significant during the Second World War when it became a component of some specialized greases. The glass industry then found it a useful additive but demand really took off when the lithium batteries, both rechargeable and non-chargeable, became standard in consumer electronics and are highly likely to dominate the fast-growing electric car market. We need to remember that by 2040 electric car production will probably overtake production of vehicles using internal combustion engines.
Zimbabwe has easily the largest lithium reserves in Africa and even by world standards is at the lower end of the top 10. The new mine will help propel the country into the top five producers. Australia is number one producer, and produces from suitable mineral rocks, hence the investment by an Australian company. It knows what it is doing. The next three on the producer list – Chile, Bolivia and Argentina – extract lithium salts by evaporation from a system of underground brine lakes near their common frontier and so use a completely different technology. China is number five but Zimbabwe can overtake in a few years to grab that slot. That is the league we are playing in.
President Mnangagwa was complimentary about his bureaucrats in the Ministry of Mines and Mining Development, other Government agencies and the parastatals. He felt that Zimbabwe had made important strides in making doing business with us a lot easier.
Ease of doing business has many facets. When you think about it opening a new mine is not just digging a hole. There are legal issues over mineral rights, land ownership and the like. There are practical infrastructure matters, such as working out whether the mine housing is a new suburb for an existing town, or a new town. There are minimum planning rules for housing and schools. Zesa has to lay on power to the mine and the houses. Water has to be piped in. Usually a new road has to be built to connect the mine to the nearest highway. Then there are the safety and environmental issues. A mine has to be safe to work in. Waste has to be stacked and dumped in a way that causes minimum mess and does not pollute.
Admittedly an Australian mining company following standard international guidelines and largely duplicating what it does back home, where geology and environment are similar, probably only faces trivial changes to meet Zimbabwean checklists, but a bunch of bureaucrats still have to tick off the checklists. So these lists need to be clear, obvious and as simple as possible.
The second requirement is also dear to the President’s general drive for efficiency. He wants the paperwork, requests and the like processed as the documents arrive in the in-trays, not left to turn yellow and curl at the edges. Bureaucrats can be helpful, honest, efficient and useful as well as obstructive and difficult. It is the first set of attributes we need from ours, even if this means having lists of registered architects and contractors, having extracts of the required regulations, which have already been simplified to the minimum, and so on ready to hand and to give out. There are tax rules, which must be clear, fair and simple, and labour laws, which must be the same.
What we need is when potential investors are gossiping, as they probably do, is something on the lines of: “Those guys in Zimbabwe are okay. Bit of paperwork as you would expect but generally clear and obvious and they whisked us through the procedures at a good lick. And my friend, there wasn’t even a vague hint that a present was useful or needed, unlike some places I could mention. The new bloke has fixed that too. They could do a couple of things a bit better of course but generally no serious complaints. Place is peaceful too. Yah, if I was you I would give it a good hard look.” Word does get around.
The President did raise a couple of other issues. He expects in return for the red carpet a degree of seriousness, that is implementation of projects. And he invited investors to keep in contact with universities and colleges to ensure that the right skills they needed were being taught and so there were Zimbabweans ready for swift practical training and employment. Neither request is unreasonable. It is always cheaper anywhere in the world to hire locals rather than bring in staff but obviously you need the right locals.
We need to remember that the world does not owe Zimbabwe a living and that we do not have a monopoly on anything. But we have a good range of resources and if we treat investors decently and fairly we can get our fair share of investment and make deals that benefit both us, the owners of the resources, and the investors prepared to spend the money to exploit them. If we are fair, clean and serious then we can expect to find partners who are the same.
