Zambia’s entire economy depends on copper and cobalt for survival since privatisation in the early 90s, the mining sector in Zambia has attracted Canadian, Chinese, Indian, Australian and American mining companies.
Rudairo Dickson Mapuranga
For over two last decades Zambia has transformed its economy by attracting foreign direct investment (FDI) and its GDP per capita has surpassed that of Zimbabwe in recent years.
For more than three decades, Zimbabwe boosted a higher GDP per capita than that of Zambia and attracted a significant number of foreign investors than Zambia.
Zimbabwe has one of the largest copper and cobalt reserves in the world and experts believe that Zimbabwe can earn has much as Zambia through its minerals, however, no efforts are done to attract investments in the sector unlike in Zambia.
Why Zambia is attracting FDI
According to BBC country profile, Zambia unlike most of its neighbours has managed to avoid the war and upheaval that has marked much of Africa’s post-colonial history, earning itself a reputation for political stability.
United Nations Conference on Trade and Development, the Zambian policy review document revealed that, with the opening up of the Zambian economy in the 1990s, FDI inflows increased considerably reaching $334 million in 2004. This was largely explained by the implementation of an ambitious privatisation programme (1994-2001).
The renowned Zimbabwean geologist Kennedy Mtetwa said that Zambia is attracting FDI because it is carrying out full exploration of resources unlike in Zimbabwe where companies that have been announced to have invested in diamond mining after exploration was done.
“Investment in mining is when a company takes out an EPO and spends money exploring from grassroots and discover a deposit that was not known. That is what is happening in Zambia and DRC. Since Chiyadzwa was grabbed after some companies did exploration and greedy politicians seized their hard work, no big miners will ever come to explore here for they know that the seizing of new deposits will happen again” said Mtetwa.
Why there is little FDI in Zimbabwe?
According to former Zimbabwe Miners Federation vice president, Engineer Chris Murove, there is little or no investment in copper and cobalt due to two particular aspects of the mining investment matrix, that is
(a) Extent/scale of the mineral resource and
(b) National investment policies which any investor, local or foreign would consider first before sinking funds into a mining project.
This means that investors have assessed the mining environment in Zimbabwe and discovered that the sector lacks one or all of the mentioned factors thereby contributing to fewer investments in the coal and cobalt mining sector.
According to Kennedy Mtetwa, there is very little foreign direct investment due to the fact that the current regime is disrespectful to property and human rights in full glare of investors, hence investors will not be attracted to invest in the country fearing that the same might happen to them.
“Rule of law means protection of property rights is a prerequisite. Zimbabwean courts are seen as partisan and the case being raised by investors is just the same as the refusal by the government to allow the opposition to demonstrate yet in the constitution that right is there. In short, the government is violating the constitution in full glare of investors. The foreign investors are raising valid questions, if we invest in Zimbabwe and the government violates a part of the constitution protecting our mineral rights what do we do? You cannot violate part of the constitution and think investors will say it’s okay, that’s just the opposition being violated , us investors will be safe. Investors know that any government that violates part of the constitution will violate the other parts in no time” he said.
It is, therefore, the government’s complete mandatory to respect both human and property rights, renowned business Mutumwa Mawera has been lamenting over the government’s decision to start carrying out operations at Shabanie Mashaba Mines before ownership issues were addressed by the courts of law.
Engineer Murove also pointed out on the need for investors to have full knowledge about the resources that are found on the land to be mined, therefore the country needs to invest in exploration.
Where extensive and commercially viable resources of copper were known to be present in Mhangura for instance, it was a government entity that was mining that resource but eventually, that business collapsed as we all know like a multitude of other state enterprises. The lesson that should be learnt is that the government has no business in business and copper mining should have been left to the private sector. The policy that was being followed clearly failed and therefore needs to be modified.
Should the country invest in Exploration to attract investment in copper and cobalt?
Granting of Exclusive Prospecting Orders (EPOs) is targeted at discovering new deposits in the mining sector. Copper and cobalt is believed to be plenty in Zimbabwe like in Zambia, therefore it is important for the country to invest in exploration in order to find new deposits.
According to the Deputy Minister of Mines and Mining development Hon Polite Kambamura, Zimbabwe’s mineral wealth has not been fully explored or established hence the granting of these Exclusive Prospecting Orders to boost investment in the mining sector.
It is therefore of paramount importance for the country to invest in exploration in order to find new deposits.
Is the mining sector attracting investment elsewhere?
The government of Zimbabwe has welcomed Russian based world top diamond producer by volume, Alrosa and Chinese firm Anjin in diamond mining, a move which was hailed by both the president of Zimbabwe and the Ministry of Mines and Mining Development.
However, the coming of these giants has raised a lot of noise with mining experts and personalities claiming that the companies are just bogus investors who come to take away the wealth of the land after exploration has been done.
According to some, the move to give licenses to these companies is not an economic investment but political investment. Therefore, to say that Zimbabwe has attracted foreign direct investment in these firms is mare deception.
“So they come to known Chiyadzwa diamond fields, carry out zero exploration and just see if there is anything left from the previous mining. So what have they invested?” said one mining expert.
This article first appeared in the September 2019 issue of the Mining Zimbabwe Magazine.