Editorial Comment: Mining to drive growth this year

While the widespread rains seen this week will no doubt minimise damage to crops and help a lot more to come to harvest than had originally been feared, it is fairly obvious that mining will lead the economic growth this year with agriculture at best just holding its own.

World mineral prices are rising, partly because the global economy is pushing forward as the world learns to manage Covid-19 and climbs out of the partial downturn the pandemic caused and partly because the Russia-Ukraine conflict has caused a number of mineral buyers to seek alternative sources of supply.

At the same time several of the Second Republic programmes to expand mineral production have seen old mines reopening and the first of the new mines coming into production, so Zimbabwe is mining more and getting prices for what it mines. 

The combination sees a significant upturn in the value of mineral production and that, when factored into the equations used to calculate the average growth across all sectors will show total growth, independent analysts have predicted.

More value can be wrung out of our minerals if we do more processing and refining in Zimbabwe. Our coal has always been processed locally, but now new coke plants are in operation, so we can export that product and investors, both foreign and local, have restarted processing of ferrochrome and nickel, so we have been able to reintroduce the ban on ore exports and insist that all exports of these metals are metal bars.

Gold production is rising, thanks to investment into existing mines, the re-opening of two older mines by a private-Government company, a smarter system of getting the production from the small-scale mining community back into the legal fold and rising world prices making gold mining more viable.

While Fidelity Printers and Refiners, the gold buying and processing arm of the Reserve Bank of Zimbabwe, does refine gold to very high levels it has still to get back its international recognition as a refiner that can produce gold ingots of the precise mass and purity to meet final settlements in the gold markets.

This is not a technical challenge, since Fidelity can produce the required ingots, but rather gaining the recognition back again after challenges some years ago saw Fidelity lose this needed                                  status. 

So our gold still has to go through a final stage in another country, although what we deliver to that final processor is already the required final quality.

The platinum group metals have been exported partially refined as concentrates for the final processing in South Africa. 

There were reasons for this, including the high investment needed in a local final refining plant and the requirement that enough platinum group metals were produced to make that investment pay off. 

However, the two largest platinum mines are now committed to the investment and have already made considerable progress in constructing and installing the refineries, which among other products will be able to make sulphuric acid, a key fertiliser ingredient, by turning a waste pollutant into something they can sell, so killing two birds with one stone.

The Chamber of Mines of Zimbabwe, while happy with the progress, would now like to see a return to local final beneficiation of copper and a serious effort made to start local processing of diamonds in light of predictions firming up into expectations of growing output. 

Now the Second Republic has sorted out the diamond industry, so well that Zimbabwe will finally chair the Kimberley Process next year and no longer faces any market resistance to its products, the next step becomes obvious and possible.

One mineral that has been very much in the doldrums for almost two decades is iron. With the collapse of Ziscosteel there was no real market although an investor in Masvingo has been steadily increasing output of sponge iron so at least we have continued with some mining.

However we are likely in the near future to be moving from no steelworks to three steelworks, two being funded by major Chinese investors and the third being the resuscitation, effectively the rebuilding using modern technologies, of Ziscosteel after Kuvimba, the company that is already opening old gold and nickel mines, came aboard.

The level of production will be far in excess of Zimbabwean demand, although having this sort of base means Zimbabwean industry can look seriously at the metal bashing sectors once again, so exports will be critical. 

While being landlocked means that exports of iron ore are simply unviable, steel is one of those products that can be sold in export markets and pricing and low transport costs should ensure that regional markets can be exploited.

Steel is an industry where beneficiation goes far beyond bars of metal. 

It can mean products such as bar and sheet, and then things made out of those intermediate products. 

Our industrial growth has been built on light industry and food processing but the opportunities now open, with the growth in mining and the steelworks, to move into heavy industry. 

The education reforms mean that the output of engineers and technicians to run those industries is there, and the continued need of some qualified Zimbabwean engineers to work outside the country will no longer be necessary if we can build our own engineering industries.

One problem with agriculture marking time this year is that the spread of the new wealth could be set back. 

Getting farming fixed, with our present reformed land allocation system, meant that larger harvests moved more than a million families out of poverty.

Mining creates jobs, good jobs and a lot of jobs, but the profits tend to be concentrated, so Government policies need to be in place to ensure that the huge farming communities can continue to make money and be moved out of poverty. 

This will require more support, already in place, to process agricultural products on farms and near farms. 

In rich countries with small-scale farms, farmers make their high incomes from growing and processing, not just growing.

This is already in the development programmes in Zimbabwe but with the huge variations in seasonal weather patterns possibly needs to be accelerated.

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