Maravi

(NEWZIMBABWE, REUTERS) Power woes threaten mining revival

Power woes threaten mining revival
by MacDonald Dzirutwe
24/03/2010 00:00:00

ELECTRICITY shortages and lack of access to capital is threatening the recovery of Zimbabwe's mining sector, while uncertainty over empowerment laws is keeping investors away, the mining chamber said on Tuesday.

The mining sector has been the mainstay of the country's export earnings since 2000 when commercial agriculture production plunged following President Robert Mugabe's seizure of white-owned farms.

Chamber of Mines President Victor Gapare said the industry's recovery, which started last year after the formation of a unity government by President Robert Mugabe and his long time rival Morgan Tsvangirai, now Prime Minister, was now under threat as miners could not get financing and power shortages worsened.

"Mines have not been able to access both working capital and long term capital to recapitalise. There are no foreign lines of credit for the industry at the moment," Gapare said in an e-mailed response to questions from Reuters.

"With regards to electricity, ZESA (utility) is struggling to supply the (mines)."

The coalition government has said it needs up to $10 billion for the economy to fully recover but Western donors have continued to withdraw badly needed aid and lines of credit until the administration implements political reforms.

Gapare said platinum mines were operating at near maximum production, gold producers at between 30-40 percent capacity but nickel mines remained shut.

He said gold production had been capped at 500kg a month since November 2009 and was likely to remain at this level, giving an annualised output of 6 tonnes this year. Output reached 4.2 tonnes in 2009 up from 3.5 tonnes the previous year.

At its peak in 1999, gold production stood at 27 tonnes.

"It's difficult to see production increasing significantly in 2010 in the absence of capital and electricity," he said. Gapare said the timing of the publication of contentious rules that force foreign-owned firms, including mines to cede 51 percent shares to local blacks, was bad.

He said foreign investors had shown interest in exploiting Zimbabwe's huge platinum reserves and gold, coal, chrome and diamonds, but were holding back until the government clarified its empowerment legislation.

The rules require foreign-owned companies to dispose 51 percent of shares to locals within 5 years and will also target some of the global mining houses operating in the country.



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Number one and two platinum producers Anglo Platinum Ltd and Impala Platinum Holdings have operations in Zimbabwe while Rio Tinto Plc is the largest shareholder in a diamond mine in the south east of the country.

"If we don't put in place an attractive investment regime, we will not win and our leaders have to realise that ordinary Zimbabweans want to see the country working so that we don't become a failed state," said Gapare.

The mining chamber has made recommendations to the mines ministry on what they want included in a Minerals Amendment Bill that is expected to be passed by parliament by the end of 2010.

A previous bill lapsed in parliament in 2007 and the government has been working on a new law. - Reuters

Labels: ENERGY, MINING, POWER OUTAGES, VICTOR GAPARE

posted by MrK @ 3:17 PM