Zimbabwe Mining Report Q2 2008

Publication Date	May 2008
Publisher	Business Monitor
Product Type	Report
Pages	66
ISBN Number	1755-7917
Product Code	BMI01975

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Summary

The regulatory position of mining companies remained unclear in March, as the country went to elections.

The outcome of the polls themselves was uncertain, and political risk remained extremely high. Just before the polls President Robert Mugabe had signed the Indigenisation and Economic Empowerment Bill, requiring foreign companies to offer 51% of their shares to indigenous Zimbabweans. The Indigenisation and Empowerment Minister, Paul Mangwana, was quoted saying 'this is not going to be expropriation. We recognise that businesses that are already in existence will need time to adjust... the time frame could be five to 10 years. There is no reason to panic'. However, a number of independent analysts were critical of the government's approach. Harare-based economist Godfrey Kanyenze was quoted by news agency AFP saying the new law would 'entail the destruction of the economy', adding that 'we should have learnt from the blunders of the land reforms where people who were not properly equipped rushed to grab farms'.

The geology of Zimbabwe is very richly endowed. Of the 40 known metals and minerals that it is home to - gold, platinum and chrome form the principal endowments. The country's gold reserves are among the largest in the African region while it hosts the second-largest platinum reserves in the world. Another segment that has caught the attention of miners in Zimbabwe is diamonds, after the discovery of a number of significant kimberlites.

For a country long saddled with severe economic problems, the mining industry underscores its importance by earning over 40% of the total export revenues for the nation.

Like its African peers, Zimbabwe has not been able to derive the full benefits of its myriad resource base.

Chiefly responsible for this is the business-incompatible environment that the country harbours. Persistent hyperinflation, ineffective fiscal policies and lax regulations characterise the Zimbabwean economy as a result of which the country is viewed as a high-risk destination. Illegal smuggling of gold and diamonds also translates into revenue losses of millions of dollars. All these factors indicate the need for the government of Zimbabwe to adopt a progressive outlook for the country's future and to align its laws and regulations to complement the economy.

The Ministry of Mines and the Zimbabwean Chamber of Mines are the regulatory bodies that govern the mining industry, while it is the Environmental Management Agency that deals with environmental issues in mineral exploitation at the project inception and development stages. A new mining empowerment legislation is on the horizon, and will permit Zimbabwean nationals to claim majority stake in foreign companies. However, the impending legislation is not finding favour with the majority of players as it is seen to be another blow to the already frail investment environment of the country.

Industry Forecast The recent surge in metal prices - especially of gold and platinum - has been a boon for the mining industry of Zimbabwe. However, even if the political regime changes, the investor-unfriendly policies of recent years will cast a long shadow over the performance of the mining industry this forecast period.

According to this report, the industry is forecast to register an average annual contraction of 1.5% during 2008-2012.

Content

Executive Summary .........5 Industry Trends And Developments ..............................................................................................................7 Overview................................................................................ 7 Latest Developments .............................................................. 9 Regulatory Structure And Developments ............................... 9 Latest Developments ............................................................ 10 Key Projects....................12 Metals ....................................................................................... 12 Iron...................................................................................... 12 Gold..................................................................................... 12 Gold: Latest Developments.................................................. 14 Copper ................................................................................. 14 Nickel................................................................................... 14 Platinum .............................................................................. 15 Platinum: Latest Developments ........................................... 15 Minerals.................................................................................... 16 Coal ..................................................................................... 16 Coal: Latest Developments .................................................. 16 Diamonds............................................................................. 17 Diamonds: Latest Developments.......................................... 18 SWOT Analysis...............19 Business Environment ..22 Ratings Overview................................................................. 22 Regional Overview Africa................................................. 24 Zimbabwe: Business Environment Ranking .............................. 25 Limits To Potential Returns ................................................. 25 Risks To Realisation Of Potential Returns ........................... 26 Legal Framework................................................................. 26 Labour Force....................................................................... 27 Foreign Investment Policy ................................................... 29 Political Environment .......................................................... 31 Industry Forecast Sce31 Metals Price Outlook........................................................... 36 Regional Analysis ................................................................ 37 Zimbabwe Mining Industry Forecast ................................ 40 Competitive Landscape.42 Company Monitor...........43 Appendices .....................49 Appendix A: Global Assumptions.............................................. 49 Down But Not Out In 2008 .................................................. 49 United States........................................................................ 50 Europe ................................................................................. 53 Japan ................................................................................... 54 China ................................................................................... 55 Commodities ........................................................................ 57 Agricultural Commodities.................................................... 59 Appendix B: Regional Demographic Data................................ 63

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Product features / use

Scope	Expert Insight/Opinion
Level	General Industry Strategies
Data	Detailed Market Forecasts
Profiles	Profiles of Key Companies
Features	Contains SWOT Analysis
Extra Info	Consumer Trends Highlighted