Zimbabwe is located in the African continent between Zambia and South Africa. The total area of the country is 390,757 km2, and it has a population of 16,150,00, according to 2016 estimates. The country’s climate is tropical.
|The national flag of Zimbabwe.
Image Credit: CIA Factbook
After the country gained independence, poorly-formed policies and campaigns initiated by the government resulted in a crippled economy and a general shortage of basic necessities. Political instability and rampant corruption also led to various economic problems such as poor infrastructure and regulatory flaws, constant indigenization pressure, indecisive policies, huge external debt, unemployment, and hyperinflation. However, the country has seen slow economic progress with the 2017 GDP amounting to $33.87 billion.
Zimbabwe has abundant natural resources including diamond, gold, coal, iron ore, chromium ore, vanadium, asbestos, nickel, copper, lithium, tin, and platinum group metals.
Overview of Resources
Diamond, old and platinum-group metals (PGMs) have been the most economically significant natural resources out of 30 or so minerals and mineral-based commodities produced in Zimbabwe. The country accounted for 3.8% of the world’s diamond production, 8.5% of the world’s platinum production, and 5.2% of the world’s palladium production in 2014. In That year also saw production increase for coal (86%), cobalt (12%), ferrochromium (43%), phosphate rock (48%) and gold (10%).
A ban on the export of chromite ore was lifted in 2013. This resulted in lower domestic prices for chromite, which adversely affected small-scale chromite miners, many of whom suspended mining operations. The two major chromite ore producing companies in the country are Zimbabwe Alloys Ltd. (Zim Alloys) and Zimbabwe Mining and Smelting Co. (Private) Ltd. (Zimasco).
In 2014, 595,656 t of copper-nickel ore was processed to produce 7,026 t of nickel. In addition to mined copper-nickel ore, copper and nickel were also produced as a joint product of PGM production.
Zimplats Holdings Ltd. of Guernsey operated the Ngezi mine, which produced 3,300 t of copper, 4,600 t of nickel, 5.9 t of palladium, and 5.4 t of platinum.
The Mimosa mine owned by Mimosa Investments Ltd. of Mauritius produced 90 t of cobalt, 3.6 t of platinum, 3.0 t of palladium, 483 kg of gold, and 300 kg of rhodium.
The map of Zimbabwe. Image Credit: CIA Factbook
Industrial Minerals and Gemstones
From 2009 to 2014, alluvial diamond on or near the surface was quickly extracted from the Marange diamond field. Diamond in the underlying rock was not extracted due to economic reasons. The Gaths and Shabanie asbestos mines had to stop operations owing to the mines becoming flooded at the beginning of 2010 after electricity to the mines were cut off due to unpaid bills.
Sable Chemical Industries Ltd. owned a nitrogenous fertilizer facility at the north of Kwekwe that was well equipped with an ammonia synthesis plant, an electrolysis plant, an air separation plant, a nitric acid plant, and an ammonium nitrate plant. In 2014, the facility was operating on reduced power, resulting in an output that was just 40% of capacity.
The impact of Zimbabwe’s political instability and corruption has greatly affected the advancement of its mining sector. Other woes that have hit the sector include power shortage, food, fuel, and skilled workers.
Zimbabwe’s indigenization law states that all foreign businesses having more than $500,000 net assets should allow 51% of local operations to be handled by the Zimbabwean government. This has led to widespread discord among the foreign mining companies, which have the ability to develop the Zimbabwean mining sector to its full potential. The government has issued warnings to many companies including Rio Tinto, Impala Platinum, Anglo American, and Aquarius Platinum that licenses would be canceled if they fail to meet the requirements. Despite these legal issues, many Asian companies are continuing to invest in the Zimbabwean mining sector.
To resolve the hyperinflation issue, the government changed the legislative and monetary policies in 2009 by introducing a multicurrency national financial system that allowed the currencies of Botswana, South Africa, and the US to be used in the country. This, in turn, helped increase the production of mineral commodities.
Zimbabwe has been blessed with a wealth of mineral resources and the country does have a developed infrastructure system. Experts have said the mining industry should be able to significantly power Zimbabwe’s future growth, but only if the country can address on-going political issues, export taxes, export bans, a lack of skilled workers, and factors in the global commodities market.
Disclaimer: The author of this article does not imply any investment recommendation and some content is speculative in nature. The Author is not affiliated in any way with any companies mentioned and all statistical information is publically available.
Sources and Further Reading
This article was updated on the 18th September, 2018.