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.
Learn how to effectively navigate the market research process to help guide your organization on the journey to success.Download eBook