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Zimbabwe Mining Report Q2 2016

Zimbabwe Mining Report Q2 2016

BMI View: Zimbabwe's mining industry will grow steadily in absolute terms over our forecast period through to 2020 as production increases across the key platinum and diamond mining sub-sectors. However, we note a number of potential downside risks on the horizon, including falling mineral prices and an uncertain political and regulatory climate. Latest Developments & Structural Trends

Zimbabwe is richly endowed with deposits of chrome, gold, nickel, diamonds and platinum, among other minerals. Its gold reserves are among the largest in Africa, while it has the world's second-largest platinum reserves. Diamond reserves are measured to be the second-largest globally after Russia. Development in these key markets together with a gradual more stable political and economic climate has seen the country's status as major global producers strengthen in recent years. In terms of overall output, Zimbabwe is challenging the world's largest platinum producers, Russia and South Africa, while a recent reduction in taxes for smaller gold miners will see production rise at almost a double-digit rate this year.

The mining sector will nevertheless face increasing challenges to its current growth trend, however. Political and economic risk remains a particular concern from both a regulatory and investment point of view and the ZANU-PF will continue to spell trouble for the future of the industry.

The changing regulatory environment surrounding Zimbabwe's diamond mining industry is likely to create challenges as well as opportunities for diamond production over the next few years.

In terms of challenges, on February 22, 2016, the Zimbabwean government has ordered all diamond mining firms in the Marange diamond fields to halt operations and vacate their premises within 90 days, stating that their licences and special grants have expired. The announcement follows months of wrangling between the mining companies and the government over its plans to merge the mines into a single entity, under which the state-owned Zimbabwe Consolidated Diamond Company will own 51%. The diamond fields in the east of Zimbabwe near Mozambique are currently mined by Anjin, DMC, Jinan, Mbada, DTZ OZGEO, Rera, Gye-Nyame, Kusena and state-owned Marange Resources (see regulatory development section for more insight).

Zimbabwe is posed to challenge Russia and South Africa as the world's leading platinum producer over the coming years as new investment by both existing and new players allows the country to capitalise on its considerable reserves, which are the second largest in the world. Coincidentally, the country will see its status lifted by slowing production growth in neighbouring South Africa, where serious difficulties as a consequence of labour unrest and high energy costs will mean that the world's largest platinum producer will experience major difficulties in maintaining production levels.


BMI Industry View
Table: Zimbabwe Mining Industry Value
Latest Developments & Structural Trends
SWOT
Industry Forecast
Platinum: Output To Head Higher
Latest Developments
Table: Platinum Production (Zimbabwe 2014-2020)
Table: Zimbabwe - Major Platinum Projects
Structural Trends
Refinery Decision Finally Made
Gold: Smaller Miners To Boost Production
Latest Developments
Table: Gold Production Forecast (Zimbabwe 2012-2020)
Table: Key Gold Projects In Zimbabwe
Structural Trends
Diamonds: Significant Growth Potential, Despite Unfavourable Environment
Latest Developments
Table: Diamond Production (Zimbabwe 2012-2020)
Structural Trends
Industry Risk Reward Ratings
Zimbabwe - Risk/Reward Index
Rewards
Industry Rewards
Country Rewards
Risks
Industry Risks
Country Risks
Risk/Reward Index
Key Takeaways
Latest Revisions
Table: Africa - Mining Risk/Reward Index
Regulatory Development
Regulatory Underperformance
Commodities Forecast
Commodities Outlook
Table: BMI Commodities Price Forecasts
Competitive Landscape
Table: Southern Africa - Largest Listed Mining Companies
Company Profile
African Consolidated Resources
Global Company Strategy - Impala Platinum - Q1 2016
Table: Impala Platinum - Key Financial Data
Regional Overview
Table: SSA - Government Involvement In Mining Sector
Methodology
Industry Forecast Methodology
Sources
Risk/Reward Index Methodology
Table: Weighting Of Indicators

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