By Malvern Mkudu

The Zimbabwe Mineral Development Corporation (ZMDC) is finding it difficult to attract investors for more than 10 mining projects it has advertised on its website. Most of these are disused mineshafts where the previous proprietors ceased operations a long time ago.

The majority of them are gold mines, but there are also copper and tin mines available – including Mhangura, Sanyati and Alaska copper mines. Other mines looking for investors include Sabi and Jena gold mines.

Recently the ZMDC announced that Elvington Gold mine near Chegutu had found an investor and operations would soon commence. But to date nothing has materialised. The parastatal announced that gold would be recovered through the treatment of sand. This scientific process involves the extraction of gold from old mine dumps.
Most of the mines closed down due to the economic crisis triggered by the government’s misguided and corrupt land grab in 2000, making it difficult to acquire new equipment, retain key staff and keep operations going as a result of hyperinflation.
Years of neglect
A visit to some of the towns where there was robust mining revealed hopelessness among the people and a trail of destruction of infrastructure through years of neglect. A resident in Chegutu said they had given up hope of Elvington Gold Mine resuming operations as promised by government.
“We depended on this mine for our livelihoods but we are fast losing hope that it will ever open,” said Kainos Murombedzi a resident of Chegutu who had hoped to be employed by the mine.
In its ZimAsset economic blue print adopted in 2013, Zanu (PF) made mining one of the main pillars of the economy and undertook to re-open disused mines in a bid to create employment. Funding challenges and lack of investors have been blamed for the stagnation of mining activity. But investigations reveal other factors which are stalling investment.
Economist Nyasha Muchichwa said investment would not be forthcoming. “The environment is not good for investment and this will be a hurdle for any investor to invest in these mines,” he said.
No deals
He doubted if the ZimAsset’s objective of opening the mines could be achieved, although he acknowledged that would create many jobs if it succeeded.
Several investors from China and other countries have reportedly expressed interest in recapitalising the Mhangura copper mine but no deals have been concluded. At its peak in the 1980s Mhangura mine was an exporter of copper to other countries and source of livelihood for many Zimbabweans.
Through solvent extraction for metals and treating of waste waters some of these mines can be restored to capacity operations. However, despite these methods being successfully used in other countries and investors making inquiries to the relevant authorities, not much has been done.
Minister of Mines Walter Chidhakwa last year all but confirmed the widespread corruption and bureaucracy in his ministry by admitting that some of the board members of parastatals that fall under his ministry had behaved improperly – frustrating investors in the process.
Corruption battle
In a raging corruption court battle in 2014, Core Mining Managing Director, Lovemore Kurotwi accused former Mines Minister Obert Mpofu of demanding $10 million to have a diamond mining deal sail through.
In 2013 details surfaced that the ZMDC led by Goodwills Masimirembwa then, had coerced Ghanaian investors into paying $6 million into the personal pocket of the ZMDC chairman. President Robert Mugabe was sucked into the matter but the ZMDC chairman was never arrested.
Despite lack of action by government, the perception by some foreigners is that corruption makes it difficult for interested investors to invest in Zimbabwe.
Joel McGregor of the Australian Embassy recently expressed skepticism about the business and economic environment in the country. He said the embassy considers many factors such as business certainty that investments would yield profits and policy clarity. He added that reports of corruption were also acting as an impediment to investors.
Facilitation fees
Another official at one of the embassies who refused to be named added: “It is difficult to invest in Zimbabwe without someone demanding bribes or what they call facilitation fees. You are bounced from one minister to another until you give up.”
Speaking at Mugabe’s 91st birthday celebrations this year, Vice President Emmerson Mnangagwa admitted that there was serious bureaucracy and red tape in government departments that was frustrating investors.
Efforts to get comment from ZMDC were futile despite several phone calls and sending emails as requested by the Managing Director’s office.
Investigations revealed that investment applications are often delayed at the Zimbabwe Investment Authority (ZIA), mines ministry offices and the Reserve Bank of Zimbabwe (RBZ) – which are among the key departments in the mining sector.
Lengthy processes
A new investor in Zimbabwe has to go through a number of processes that are both lengthy and expensive. According to the ZIA website, one has to get an investment permit and residence and work imports issued by the home affairs ministry before they start business operations.
Foreign investors need a certificate of compliance with the indigenisation requirements while investing in an existing company requires approval from the Exchange Control Authority of Reserve Bank of Zimbabwe (RBZ).
These procedures take months and during this process investors are often entangled in a lengthy bureaucratic web. Questions sent to the Zimbabwe Investment Authority on what they were doing to make investment easier had not been responded to by the time of going to print. It takes at least 90 days for foreign investors to be registered in the country.
The 2014 annual survey of mining companies that relies on views from mining activities ranks Zimbabwe as one of the most unattractive mining investment destinations behind the Democratic Republic of Congo, Mozambique and South Africa.
Official figures show that mining constituted 31 percent of Foreign Direct Invest after a paltry $180 million was invested in Zimbabwe to undertake 55 mining projects in 2013.
This is unlikely to improve if the government does not move to curb corruption and bureaucratic tendencies in its departments, and experts say this is worrying considering that mining accounts for about 20 percent of GDP.
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